Key facts
- Realty Income, Cloud Capital, and an undisclosed global institutional investor have formed a joint venture focused on hyperscale data centers.
- The venture's initial acquisition targets three assets in Northern Virginia, valued at over $6 billion.
- Realty Income expects to hold a 45% equity stake in the initial three-asset investment.
- Realty Income plans to invest up to $1.4 billion over time, with $700 million funded in the second and third quarters.
- Cloud Capital's affiliate, CloudHQ, will provide property and development management services.
Realty Income, a San Diego-based REIT, is entering a joint venture with data center investment management firm Cloud Capital and an undisclosed global institutional investor to acquire hyperscale data centers. The venture aims to focus on stabilized assets leased to investment-grade tenants under long-duration, triple-net leases.
The partnership is set to acquire three hyperscale data center assets in Northern Virginia's Data Center Alley, with a combined value exceeding $6 billion. The first acquisition is anticipated to close in the third quarter of the year, with the remaining two assets, currently under development, to be acquired upon completion.
Realty Income expects to hold a 45% equity stake in the initial three-asset investment, committing up to $1.4 billion over time. The REIT plans to fund the initial portion of this investment, amounting to $700 million, between the second and third quarters.
Realty Income CEO Sumit Roy stated that the announcement underscores the strength of their business model and its adaptability across sectors, including digital infrastructure. Cloud Capital, which has a track record of acquiring 30 data center assets globally since 2020, will hold a minority stake in the initial portfolio. Its affiliate, CloudHQ, will manage the properties and development.
Cloud Capital's President and Chief Investment Officer, Shariar Mohajer, highlighted the increasing importance of specialized sector expertise and proprietary sourcing in the maturing digital infrastructure market. He noted that their platform's capabilities allow access to differentiated investment opportunities and the creation of portfolios with resilient cash flow and long-term value.
This move marks Realty Income's expansion into the data center market, following a previous partnership in November 2023 with Digital Realty to fund two build-to-suit data centers in Northern Virginia, where Realty Income invested $200 million for an 80% equity stake.