Data Center Mergers and Acquisitions: Q&A with Informart’s Andrew Gold
by Josh Anderson
SAN FRANCISCO, California – On the heels of a major merger by Peak10 and ViaWest, CAPRE interviewed Andrew Gold, Sr. Vice President for Corporate Development & Chief Counsel at Infomart Data Centers about what he sees as the most interesting development in the data center sector, both in his region, the Pacific Northwest, as well as across the United States.
As Chief Counsel at Infomart, Andrew is responsible for lease negotiations, compliance and carrier relations, as well as being part of the corporate and business development executive team. Andrew began his career over 20 years ago practicing law at large firms, then left after a few years for a more entrepreneurial career path. Since then, he has founded companies, served as a senior executive in technology and venture capital firms in the US and Europe and has closed hundreds of transactions ranging from data center leases to IPOs.
CAPRE: What is the most interesting aspect of the data center industry, right now, in June 2017?
Gold: Looking to the future, there is a lot of M&A activity and recapitalization going on. Peak10 just bought ViaWest from Shaw.
CAPRE: And, why is this an interesting time for M&A activity?
Gold: Actually, what attracted investors not too long ago to data centers as “alternative” investments were the high yields. It was considered riskier, because the idea of colocation was not well established. We formed REITs and investors who got in early have enjoyed healthy yields. Today, capital is thirsty for yield, and everyone wants in on the data center industry. So that is compressing yields. You have the same amount of income but lower yield.
CAPRE: How will the market respond to these lower yields?
Gold: Yields will stay low unless you can cut costs. So it will be interesting to see how new investors in the private equity and REIT space will keep achieving high yield. Will supply keep pace with that growth?
CAPRE: Are we approaching a bubble?
Gold: I don’t think we are. Supply will stay high, but demand is really high too.
CAPRE: In your opinion, what are the factors driving that demand?
Gold: Well, I can speak to that mostly in Oregon because we have the largest wholesale facility in the state. People like Oregon because of our low taxes. There’s no sales tax, for example. The government works hard to attract the data center industry, and tech firms/jobs in general.
CAPRE: Any other reasons behind the scenes?
Gold: One reason that surprises people is how cheap and, more importantly, renewable power is. We offer tenants one hundred percent renewable energy from PG&E. That’s because Oregon enjoys deregulated energy markets. Tenants get it for only a few fractions of a cent per kilowatt. This is very attractive to firms who are under scrutiny for their carbon footprint.
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