GI Partners, a private equity firm, through its TechCore investment vehicle, a discretionary core real estate fund with investment commitments from the California Public Employees’ Retirement System (CalPERS), today announced that it has secured a $389m debt refinancing for the One Wilshire building, which comprises 661.5k sqft of data center and office space in downtown Los Angeles, California. Notably, CoreSite, a data center provider owned by American Tower, operates One Wilshire’s main interconnection point, or meet-me room, located on the 4th floor of the building.
Debt Refinancing – GI Partners’ One Wilshire
GI Partners’ One Wilshire borrower entity, GI TC One Wilshire, LLC, secured a 10-year, fixed-rate, non-recourse, full-term, interest-only loan with Goldman Sachs. Specifically, the $389m of loan proceeds will be used to pay-off the property’s current loan early (maturity in August 2023) and dividend a portion of the equity to GI Partners’ TechCore.
History
In July 2013, GI Partners and CalPERS, via the TechCore investment vehicle, acquired One Wilshire from Hines Real Estate Investment Trust (REIT) for $437.5m, equivalent to $660 per sqft. At the time, TechCore funded the acquisition with a $180m whole loan (~40% loan-to-value) and $260m of equity.
One Wilshire – Data Center Overview
One Wilshire is located at 624 South Grand Avenue in downtown Los Angeles, California, between 6th and 7th street. This 30-story, 661.5k sqft colocation facility and office building was built in 1967 and renovated in 1992, to install data center and telecom infrastructure.
Importantly, nearly every major data center in Los Angeles accesses One Wilshire as its primary fiber optic terminal and interconnection point (i.e., 330+ networks). As a result, a Los Angeles data center cluster has formed in close proximity to One Wilshire.
Overall, One Wilshire is 89% occupied by a combination of colocation providers, carriers, internet service providers (ISPs), and financial services companies, amongst others. Historically, CoreSite, Verizon, Lumen Technologies (formerly Qwest Communications), and DataBank (formerly Zayo’s zColo) have been top telecom tenants at One Wilshire.
CoreSite Realty
Since 2001, CoreSite has been a tenant and operated its Los Angeles Data Center (LA1) at GI Partners’ One Wilshire building. Presently, CoreSite’s operational and development space comprises ~26% of One Wilshire’s net rentable square feet (NRSF).
As of Q3 2020, CoreSite operated 163.0k NRSF at its LA1 facility, of which 85.4% was occupied. Additionally, CoreSite has a further 10.4k NRSF as held for development, which brings its total presence at LA1 to 173.4k NRSF.
In aggregate, CoreSite generated annualized rent of ~$31.4m from its LA1 data center. Indeed, this implies that the company is producing ~$192 per operational NRSF from the building.
Operating Lease
In July 2018, CoreSite extended the term of its original lease, with GI Partners, at One Wilshire to 2029. Additionally, CoreSite maintains three, five-year renewal options, giving it control over its space through 2044.
DataBank
DataBank operates its LAX1 data center facility in the One Wilshire building, offering 1.8 megawatts of critical IT load across 20k raised sqft. In April 2017, GI Partners announced that Zayo Group expanded at One Wilshire “as a data center tenant” (i.e., zColo which was ultimately sold to DataBank).
TechCore Sponsors – GI Partners and CalPERS
TechCore, LLC is a subsidiary of GI Partners which functions as a core investment vehicle for technology-advantaged real estate in the United States. Specifically, this includes data centers, carrier hotels, corporate campuses for technology tenants, and life science properties.
To-date GI Partners has invested in 3+ million sqft of core technology-advantaged real estate for TechCore. Particularly, these investments include acquisitions of 11525 Main Street in Broomfield, Colorado; 9911 Belward Campus Drive in Rockville, Maryland; 850 Winter Street in Waltham, Massachusetts; Liberty Park at Tysons in Vienna, Virginia; 7510-7610 Mason King Ct in Manassas, Virginia; 45360 West Severn Way in Sterling, Virginia – as well as TechCore’s One Wilshire.
GI Partners
GI Partners is a San Francisco-based private equity firm, which has raised over $29bn in capital. Overall, the firm’s three primary strategies include private equity, real estate, and data infrastructure.
Beyond the CoreSite-occupied One Wilshire, GI Partners’ recent data center-related investments have included:
- DR Fortress: data center operator in Hawaii
- Flexential: retail colocation provider targeting the enterprise data center segment
- LightEdge: data center provider focusing on retail colocation and managed services
California Public Employees’ Retirement System (CalPERS)
CalPERS is the largest public pension fund in the United States with ~$480bn in assets under management (AUM). Overall, the organization administers retirement benefits for 2+ million current and retired California state, public school, and local public agency employees and their families.
