We have seen a growing number of investments moving towards development in the capital-intensive data center industry. Data centers increase in size via internal growth–they either expand existing data centers or build new ones. Acquisitions have only been a portion of all investments.
During the year of 2015, acquisitions, however, have taken a greater role. They have helped companies increase their individual geographic footprints or have enhanced product selection. Eventually, they have made companies intrinsically better or have increased their range either domestically or internationally.
It is important to point out that some companies have not acquired any other companies in 2015; but, we cannot deny that acquisitions serve as a concrete indication of a company’s strategy.
Although their development has kept last year’s pace, their investments have spiked this year, mostly because of the $400 million acquisition of Cervalis. Cervalis includes four data center facilities and two work area recovery facilities serving the New York metropolitan area. This acquisition added an important location to the company’s footprint and brought new enterprises strengthening their client base.
Their investments have doubled from last year because QTS bought Carpathia, a Virginia-based colocation, cloud, and managed services provider for approximately $350 million. The Carpathia acquisition added 230 customers and several new locations, including international ones.
Digital Realty has recently raised proceeds of approximately $1.9 billion of debt and equity capital to acquire Telx, a New York-based data center solution provider with multiple US locations. The Telx acquisition strengthens Digital as a leading colocation and interconnection platform.
Equinix, the largest data center REIT, continues its international expansion by acquiring UK’s TelecityGroup for $3.5 billion and the Japan-based Bit-isle for $280 million.
A top performing stock in 2015, CoreSite has not resorted to acquisitions to raise its profile. Most of their investments have been deployed into developing real estate and the company has not made any material acquisitions.
Most of their investments were developments and not acquisitions. Their level of investment has been reduced, indeed as the company has licked its wounds following the bankruptcy of a client.
Companies: DuPont Fabros Technology (NYSE:DFT), CyrusOne (NASDAQ:CONE), CoreSite Realty Corporation (NYSE:COR), Equinix, Inc. (NASDAQ:EQIX), Digital Realty Trust, Inc. (NYSE:DLR), QTS Realty Trust, Inc. (NYSE:QTS).
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Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.