Mountain Development Corp. has sold a recently completed Clifton, New Jersey, data center for $53.9 million to private-equity firm GI Partners and the California Public Employees’ Retirement System (CalPERS). Despite the sale, Telx, the long-term tenant and operator, will maintain operations at the 215,000-square-foot facility, dubbed NJR3.
The facility is part of a two-building campus. One facility, which was completed in June, is located at 2 Peekay Drive and the other adjacent data center is at 100 Delawanna. The sale closed in early October.
The deal reflects a trend in which real estate finds are buying fully-leased data centers as investments.
“GI Partners, through one of its investment vehicles, recently finalized its purchase of 2 Peekay Drive in Clifton, New Jersey, essentially our NJR3 data center's underlying building," said Ron Sterbenz, Telx’s Senior Vice President, Product & Marketing. "For Telx, this represents a financing transaction, and in no way changes the operational aspects of NJR3, or any operations taking place on the Telx Clifton Campus. Telx still owns the 100 Delawanna building. Although GI Partners’ investment vehicle is 2 Peekay’s owner and landlord, Telx is the long-term exclusive tenant and in complete control of the day-to-day operations of the building. This is a financial decision that allows each party to focus on what we do well, and for Telx that is operating both data centers and its encompassing campus.”
"It's really just a change-out of the people that own the bricks and mortar," Mountain Development President Michael Seeve said on Wednesday to NorthJersey.com.
In June, Telx laid out its plans for the Clifton campus, which employs about 15 to 20 Telx staff.
Growing Investments in Data Center Real Estate
CalPERS is the largest U.S. pension fund, and this is not the fund's first data center property acquisition. On behalf of CalPERS, GI Partners manages a $500 million discretionary core real estate fund, called TechCore, which targets data centers, internet gateways, corporate technology campuses and life science properties. In December 2012, GI Partners acquired two fully leased data centers.
The Clifton facility falls in line with the TechCore fund’s mission. The acquisition is a good example of the healthy state of the data center industry. The smart money goes where the potential is, and right now, the industry is healthy enough that these fully leased properties are extremely attractive.