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Brookfield scoops up handful of data centers for $775M

Firm bets on high-demand assets, capitalizes on owner distress

Brookfield Buying Handful of Data Centers for $775M
From left: Cyxtera CEO Nelson Fonseca and Brookfield CEO Bruce Flatt (Getty, Cyxtera, Brookfield)

Brookfield Asset Management is betting on the growing importance of data centers, acquiring most of the assets from Cyxtera Technologies, a bankrupt data center firm.

Cyxtera announced the deal on Wednesday, revealing that the Toronto-based firm would purchase the real estate where seven of Cyxtera’s data centers are located. Brookfield is purchasing the real estate from Cyxtera’s landlords, which include Digital Realty Trust and Digital Core REIT.

Brookfield is paying $775 million for the data centers.

Cyxtera also amended the lease terms of six of its sites with Digital Realty — three in the United States and three abroad — so that the company could exit those leases in 2024. The company is also selling its Montreal and Vancouver data center businesses to Cologix.

The impetus for Cyxtera to make these deals derives from its Chapter 11 bankruptcy case, which was filed in June, according to Bloomberg. The company was formed in 2017 after CenturyLink’s data center and co-location business merged with Medina Capital’s security and data analytics operations.

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Cyxtera merged with a blank-check firm in 2021, valuing the entity at $3.4 billion on an enterprise basis. Because of the bankruptcy case, a hearing will need to be held in two weeks to review the Brookfield deal, which is expected to close in the first quarter.

Data center demand across the country is growing as companies recognize a greater need for such facilities, especially amid an artificial intelligence arms race. 

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Only a few months ago, Brookfield and the Ontario Teachers’ Pension Plan agreed to acquire Compass Datacenters from owners RedBird Capital Partners and the Azrieli Group for upwards of $5 billion. Compass Datacenters has a presence in nine national markets, plus Canada and Europe.

Brookfield isn’t alone in buying into data centers. Blackstone Real Estate Income Trust, has also been investing in data centers, despite being in a selling mode. The firm committed more than $8 billion to build data centers for large technology companies and spent more than $1 billion in recent years to buy land for data centers in five states.

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BankruptcyBrookfieldCyxteraData Centers