April 04, 2002
Valuing Data Centers
"Pennies on the dollar." That's the phrase you often hear about the price of finished data center space. By any measure, these facilities are available at huge discounts. But the recent sale prices of three former Exodus data centers suggests that pricing is best measured in dimes on the dollar, or even quarters.
Venture Asset Group arranged the sale of the former Exodus data centers in Herndon (Freddie Mac), Austin (Dell) and Toronto (Q9). In a press release, the company noted that Exodus spent $120 million on the facilities. A story by The Deal put price tags on the sales - $25 million for Herndon, $21 million for Austin and $15.7 million for Toronto. That's a total of $61.7 million, or 51 cents on the dollar.
Since these are quality buildings in premium markets, that valuation probably represents the market's ceiling, rather than the floor. But it's a slightly higher ceiling than might have been expected. And you know how folks in this business love high ceilings.
Posted by RichM at April 4, 2002 04:18 PMKeep in mind, these deals were all free standing properties that sold with the fee simple real estate. Exodus and Venture Asset Group have been unable to unload the data centers in multi-tenant buildings where the real estate cannot be purchased. Unfortunately, most of the available data center space falls within this catagory which is why most of the big carriers and most of the smaller players like Colo.com, Verado, Internap are still stuck with their facilities.
The market is still very soft. If you have any questions about this, I have 8 data centers available for sale with no bites in 6 months.
Posted by: Peter K at April 17, 2002 06:34 PM