CRG West is expanding its data center operations to include built-to suit services and sale/leaseback arrangements that can help companies reduce the capital requirements of their data center operations. The new services leverage the financial strength of CRG and its parent firm, the huge private equity firm The Carlyle Group, which has under $80 billion under management.
In adding custom data center development services, CRG West is following a model that has worked well for Digital Realty Trust (DLR), which has used its experience and financial strength to develop build-to-suit or turn-key data centers for many large customers, most recently Yahoo and Facebook. It also illustrates the incumbent advantage: the opportunity for experienced, well-capitalized data center specialists to extend their market leadership.
With 10 existing facilities, CRG West currently offers wholesale data center space in Boston and Los Angeles. Build-to-suit projects in each building can accommodate over 15 megawatts of power. CRG West said it is "currently evaluating additional wholesale transactions throughout the United States and abroad to meet the growing needs of its customers."
"One of CRG West's key differentiators is our ability to be flexible," said David Dunn, Senior Vice President at CRG West. "Few companies can license you a cabinet, buy your existing corporate data center, and build you a new one. We are excited to offer this full range of services to meet the needs of our customers, no matter how large or complex."
CRG West outlined a number of scenarios in which data center end-users could use its expanded services:
A Fortune 500 company could more efficiently manage its capital and reduce operating expenses by selling an underutilized data center to CRG West and leasing back all or a portion for a flexible term. Alternatively, a company looking to expand its data center footprint could build into a larger CRG West data center complex. Data center design, development and construction can be a time-consuming and difficult process that many companies are not staffed to manage. CRG West's turn-key model offers benefits to any IT executive evaluating a data center need.
A sale-leaseback option typically involves a property owner selling their building to a second party, while agreeing to continue to lease space in the building. The transaction generates cash for the former owner (now the tenant), and provides the new owner steady rent from the lease.
"CRG West is well positioned to continue to extend its data center expertise and access to capital to meet customer needs at any point along the continuum from wholesale data center space through retail colocation, interconnection and peering," said Thomas M. Ray, Managing Director at The Carlyle Group and CEO of CRG West. "Further, the company actively seeks to extend its services and capital to customers in new markets.
"CRG West brings deep experience in real estate development, data center design, construction and management, and colocation and peering services," Ray continued. "Combined with The Carlyle Group's ability to provide capital structure alternatives to meet virtually any need and any time frame, CRG West offers a compelling value proposition in the current investment climate."
CRG West now operates more than 2 million square feet of carrier hotel and data center space in nine facilities in Los Angeles, San Jose, Chicago, Boston, Miami, northern Virginia and New York. The company has been steadily increasing its national footprint of data center and carrier hotel properties over the last two years, as well as building its meet-me-room and interconnection business.