Harrison Street, a private equity firm, today announced it has acquired a significant minority interest in Summit Infrastructure Group (SummitIG), a dark fiber infrastructure provider, from the company’s existing shareholders SDC Capital Partners and Columbia Capital. Notably, SDC Capital Partners and Columbia Capital will retain a majority ownership and minority interest, respectively, in Summit Infrastructure Group (SummitIG) following Harrison Street’s investment.
Summit Infrastructure Group (SummitIG) – Overview
SummitIG owns a dense, 100% underground, fiber optic network comprised of 600+ fiber route miles throughout Virginia. Specifically, the company’s network sections include both metro (intra-city) and regional (inter-city) dark fiber infrastructure.
SummitIG’s value proposition focuses on being a flexible, scalable, and cost-effective dark fiber connectivity solutions provider. Additionally, the company offers alternative and unique fiber routes for customers to optimally control their own bandwidth requirements.
SummitIG’s network spans the Northern Virginia sub-markets of Ashburn, Leesburg, Manassas, Reston, and Vienna.
Additionally, the company’s network connects, via a regional route, with the state capital in Richmond, Virginia. Finally, SummitIG owns indefeasible rights of use (IRUs) which extend its network to Virginia Beach, a key subsea cable landing point.
In Northern Virginia, SummitIG supports the growth of the largest data center market globally, along unique fiber corridors. Indeed, data center demand in Northern Virginia continues to rapidly grow, with nearly 1 million sqft of operational data center space being added every year since 2016. Furthermore, Harrison Street is familiar with one of SummitIG’s largest markets, being Ashburn, from a data center investment it made in January 2021 (see below).
SummitIG provides its dark fiber network solutions and bandwidth infrastructure to hyperscale companies (e.g., cloud service providers), carriers, content providers, >100 data centers, large enterprises, and government agencies.
In December 2020, SummitIG completed the first securitization transaction backed entirely by dark fiber assets. Notably, the $225m asset-backed security (ABS) deal priced the majority of its four tranches between 2.29% and 3.179%. Indeed, this cost of financing is much tighter than the term loan and revolver that the company had in-place at year-end 2020, which had pricing of 5.75% (LIBOR + 4.00%, with a 1.00% floor).
Prior to Harrison Street’s minority investment, SDC Capital Partners had purchased its majority stake in SummitIG from Columbia Capital. Specifically, in January 2019, SDC Capital Partners acquired its ownership at a transaction value of $225m.
Harrison Street – Digital Infrastructure
Harrison Street is continuing to build-out its digital infrastructure portfolio, having now made investments in both data centers and fiber. Specifically, the firm has committed ~$1.1bn in digital infrastructure projects since 2018, including:
- Carrier Hotels: purchase of the Pittock Block Internet Exchange in Portland, Oregon and the Wells Building located in Milwaukee, Wisconsin
- Hyperscale Data Centers: joint venture with American Real Estate Partners (AREP) to build a 265k sqft data center in Ashburn, Virginia
- Fiber: today’s minority investment in Summit Infrastructure Group (SummitIG) by Harrison Street
Transaction Advisors – Harrison Street and SummitIG
Harrison Street’s legal advisor was DLA Piper.
SummitIG’s financial advisor was Evercore. Additionally, SummitIG’s legal advisor was Skadden, Arps, Slate, Meagher & Flom.