Buying big during the depths of the dot-com bust proved to be a winning strategy for private equity firm GI Partners, which announced today that it has sold the final facility from a portfolio of 25 data center properties purchased from 2002-2004. As the market for data center properties crashed due to overbuilding, GI Partners stepped in and aggressively and bought up properties wired for hosting IT equipment.
GI Partners invested $280 million in equity buying those buildings, and says it realized over $1 billion in proceeds from their sale, a 3.7x multiple to invested capital and a 60 percent gross IRR (internal rate of return).
Twenty one of those properties formed the nucleus of Digital Realty Trust (DLR), which was spun off as a public REIT in November 2004 and now has a market value of about $6 billion. The final remaining holding, a data center in Frankfurt, German, was recently sold to a unit of colocation specialist Equinix for $28 million. Equinix (EQIX) had previously disclosed the acquisition of the former Exodus data center, but not the seller.
"We are delighted to be announcing the sale of the Frankfurt Data Center," said Rick Magnuson, Executive Managing Director of GI Partners. "The return we have delivered to date from our Fund I is well in excess of the market average and demonstrates the success of our investment strategy." GI Partners is also the majority owner of colocation and interconnection firm Telx and hosting specialist The Planet.