Press Release

Brookfield to acquire Cyxtera assets for $775m

Thu 2 Nov 2023

Cyxtera has entered into an asset purchase agreement under which Brookfield Infrastructure Partners and its institutional partners will acquire substantially all of Cyxtera’s assets for £634.2 million ($775 million).

In connection with the agreement and the court supervised process, Brookfield will purchase from several landlords the real estate at which seven of Cyxtera’s US data centers are located. These transactions will allow Cyxtera to increase existing facility ownership, secure expansion opportunities in support of robust customer demand, and strengthen its data centre platform by giving Cyxtera more control over its cost structure.

“We are pleased to reach this agreement with Brookfield, which represents a favorable path forward for our customers, partners, and employees. Throughout our restructuring process, our business has continued to perform well. This agreement and the changes to the data centre portfolio, most importantly our increased facility ownership, will enable us to build on our business momentum and better position Cyxtera for the future,” said Nelson Fonseca, Chief Executive Officer of Cyxtera.

Among the transactions is a comprehensive agreement with Digital Realty Trust and Digital Core REIT for Brookfield to acquire the real estate supporting several of Cyxtera’s US data centers.

Separately, Cyxtera has entered into an agreement with its landlord, Digital Realty, to amend the terms of its current leases at three US sites in New Jersey and Los Angeles, and three international sites. This will allow Cyxtera to exit those sites in 2024 while providing a seamless transition for customers.

In the details of the agreement, Brookfield will acquire Digital Realty’s interest in four data centres for approximately £225.1 million ($275 million).

Digital Realty will redeploy £45 million ($55 million) to buy out Cyxtera’s leases in three colocation data centres in Singapore and Frankfurt. Digital Realty will also use £180.1 million ($220 million) of remaining net proceeds to repay debt and fund development.

Brookfield granted Digital Realty a purchase option to acquire a colocation data centre outside of London, in the Slough Trading Estate.

“This agreement mitigates the financial impact related to Cyxtera’s bankruptcy, while also enhancing our financial position, and demonstrating our commitment to and sponsorship of Digital Core REIT,” said Greg Wright, Chief Investment Officer at Digital Realty.

Lastly, Cyxtera has signed an agreement to sell its business in its Montreal and Vancouver data centres to Cologix.

The full terms of the agreement have been filed with the US Bankruptcy Court for the District of New Jersey. The hearing to approve the Company’s Chapter 11 plan and transaction with Brookfield is scheduled for November 16, 2023.

In addition to court approval, the agreement is subject to regulatory approval and customary closing conditions. The transaction with Brookfield is expected to close in Q1 2024.

Separately, Digital Core REIT also announced entry into agreements that, among other things, will generate $160 million of proceeds.

“By partnering with our sponsor, Digital Core REIT realised a comprehensive resolution to our relationship with our second-largest customer,” said John Stewart, CEO of Digital Core REIT.

Through this agreement, Digital Core REIT were able to remain insulated against a broader financial impact, while improving its customer credit quality with approximately 85% of annualised rent coming from investment grade customers.

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