IPI Partners, a digital infrastructure private equity firm, which is a joint venture between ICONIQ Capital and Iron Point Partners, today announced that its has acquired, via its funds, the carrier hotel and data center located at 1500 Champa Street in Denver, Colorado from the Morgan Reed Group (entity M.R. Champa, LLC). Since 2006, the Morgan Reed Group, a real estate investment firm headquartered in Miami Beach, Florida had owned the property.
1500 Champa Street – Denver, Colorado – IPI Partners
Built in 1952 and converted into a data center in 2001, the three-story 1500 Champa building comprises 138.1k sqft of data center and office space. Specifically, the property is situated within Denver’s downtown central business district at the intersection of 15th Street and Champa Street.
The network-centric colocation facility offers cabinets, cage space, suites, and space for private data centers, which connect to a carrier-neutral meet-me room. Within this meet-me room, occupants of the facility physically connect to one another and exchange data.
Connectivity
1500 Champa Street is one of two primary carrier-neutral telecommunications-focused data centers in downtown Denver, Colorado. Indeed, the facility is located adjacent to the Denver Gas & Electric Building, Denver’s incumbent carrier hotel. Additionally, 1500 Champa is situated next to a central switching office of Lumen Technologies and AT&T’s Denver Main building.
Overall, 1500 Champa functions as an interconnection hub for major fiber pathways servicing Denver and the Rocky Mountain region. Particularly, the building’s meet-me room offers connectivity to 15 fiber optic and network service providers. For example, these providers include Cogent Communications and Lumen Technologies.
Investment
IPI Partners plans to invest incremental capital into 1500 Champa Street to enhance the data center’s existing connectivity and to develop new colocation capacity. Initially, IPI Partners plans to conduct a first phase of construction, which it expects to complete by Q4 2022. Ultimately, the facility has the potential to support a total of up to ~10 megawatts of power capacity.
Customers
Overall, the 1500 Champa Street data center leases its capacity and connectivity to cloud and network-focused end users. Historically, three of the facility’s largest tenants have been DataBank (formerly Zayo’s colocation business), Flexential (formerly ViaWest), and the Social Security Administration (an agency of the United States federal government).
Notably, Zayo’s prior colocation lease at 1500 Champa had an expiration date in May 2030 (with two 10-year extension options remaining), meaning that DataBank’s current commitment to the data center may extend for at least another ~8.5 years.
Below are further details on DataBank and Flexential’s current presence at 1500 Champa:
DataBank
DataBank operates its DEN3 data center out of the 1500 Champa facility in Denver, Colorado. At this location, DataBank offers 2 megawatts of critical IT load across 18k sqft of raised floor space.
Historically, Zayo’s colocation business sub-leased 2.1k sqft to Google and 1.65k sqft to Inteliquent (Neutral Tandem) on lease terms through May 2030. Thus, Google and Inteliquent may still be tenants at DataBank’s DEN3 data center.
Flexential
Flexential operates its Denver – Downtown data center out of the 1500 Champa facility in Denver, Colorado. At this location, Flexential offers 529 kilowatts of critical load UPS capacity across 35.3k sqft of data center space.
Historically, Flexential (including ViaWest) has leased space at 1500 Champa since April 2007. To this end, as of mid-2015, ViaWest had reportedly invested $9.0m+ at the property in order to build-out its space.
Other
Per the Denver Property Taxation and Assessment System, companies including Apple, Facebook, Disney, Great Plains Communications, Vail Resorts, and Zscaler may also have a presence at the facility.
Operating Advisor
IPI Partners is partnering with Mike Krza as an operating advisor, to assist with the operations of the facility and expansion of 1500 Champa’s footprint. Additionally, Krza will work with IPI Partners to build-out its connectivity-focused platform expansion into other markets throughout the United States, through subsequent investments. Previously, Krza held the COO and CFO roles at Flexential and its predecessor entity, ViaWest.
Financing
Deutsche Bank’s Credit Solutions and Direct Lending group provided debt financing for IPI Partners’ acquisition of 1500 Champa Street.
Valuation
IPI Partners and Morgan Reed Group did not disclose financial terms of their transaction. However, as a reference point, in May 2015, the building was appraised, for the purposes of financing, at a valuation of $45m.
IPI Partners – Data Centers
IPI Partners has built a significant hyperscale and enterprise data center portfolio through its acquisitions of STACK Infrastructure, DigiPlex, and SUPERNAP Italia. These companies have facilities in the United States, Canada, Norway, Sweden, Denmark, and Italy. Overall, this portfolio has the potential to support over 1.3 gigawatts of IT capacity.
