One-on-One with Digital Bridge’s Raul Martynek on the State of the Data Center Market

NEW YORK, New York – Raul Martynek recently provided some insight on the latest deals in the data center space. When we asked him “How would you assess the kinds of deals that are happening lately?”, he had a lot to say. Said Martynek, “It’s no secret that it’s a very active market. What we’re seeing is a changing of traditional focus on a sector kind of middle market/private equity players to long-term infrastructure type players.” Martynek referred to the most recent deal at his firm, whose two investors are TIAA (a 600 billion dollar pension fund) and PSP (a Canadian pension fund). “These are folks that historically invested in toll roads, airports, and pipelines, and over the last five years they’ve gotten familiar with the sector –mainly first on the tower side. That’s the most kind of real estate-like communication infrastructure asset. As they got comfortable with towers and the dynamics there they’ve started to extend their reach into data centers,” he explained. According to Martynek, he sees this happening all across the sector. Investors are expecting a lower return -- in the high teens or mid teens -- as opposed to the middle market, where you might expect a high-twenties return. “What that does in a very ample credit market is drive up prices,” he says. He then spoke of another high-profile deal – that of the California-based fibre company, Wil-Con. “This is a record multiple,” says Martynek.…