Brookfield Acquires Bankrupt Data Center Operator Cyxtera For $775M

Brookfield Infrastructure Partners has scooped up another data center operator. 

The company announced Wednesday that it will pay $775M for "substantially all" of the assets of Cyxtera, which filed for Chapter 11 bankruptcy in June. The struggling data center operator had been dealing with looming debt maturities and a sinking stock price before filing for bankruptcy.

Data centers are a booming asset class at the moment, but Cyxtera’s model of leasing properties from developers and providing colocation services to companies was putting pressure on its bottom line.

Brookfield has sought to change that leasing model as it takes Cyxtera under its wing.

As part of its asset purchase agreement and the court-supervised proceedings, Brookfield reached agreements to purchase the real estate where seven of Cyxtera’s U.S. data centers are located, the company said in a press release. The transactions include purchases from landlords Digital Realty Trust and Digital Core REIT.

Owning the data center facilities will give the company the ability to secure expansion opportunities and give Cyxtera “more control over its cost structure,” the release says.

“This agreement and the changes to the data center portfolio, most importantly our increased facility ownership, will enable us to build on our business momentum and better position Cyxtera for the future,” Cyxtera CEO Nelson Fonseca said. 

In a separate deal with landlord Digital Realty, Cyxtera said it entered into an agreement to amend three existing U.S. leases and three international leases to allow it to exit the properties in 2024.

The company will also sell its Montreal and Vancouver data center operations to Colorado-based Cologix, a data center company that operates across 11 North American markets.

Brookfield has been investing heavily in the data center sector this year. In April, it acquired European Data4, likely valued at $3.8B, according to Reuters sources. In June, the company jointly acquired Dallas-based Compass Datacenters with one of the firm’s existing investors, Ontario Teachers’ Pension Plan.