Sabey Data Centers today announced the closing of a $150m investment from Manulife Investment Management, which was funded from the balance sheet of John Hancock Life Insurance Company, and will help the company grow in Northern Virginia and Washington. Specifically, funds from John Hancock will fund growth in Sabey Data Centers’ portfolio to capitalize on hyperscale tenant demand. Indeed, these hyperscale tenants include cloud service providers Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.
Sabey Data Centers – Overview
Sabey Data Centers is a hyperscale data center operator with 5 data center campuses, representing ~200 megawatts of power capacity. Collectively, these data centers comprise 3.0 million sqft, in the United States. Specifically, Sabey Data Centers operates facilities in Ashburn (Virginia), New York City, Seattle, Quincy (Washington), and East Wenatchee (Washington).
Overall, the company specializes in scalable, custom-built solutions including data center-ready shell space and turn-key data centers. With this offering, Sabey Data Centers serves many of the top financial (e.g., JPMorgan Chase), technology (e.g., Microsoft Azure, IBM Cloud, Juniper, Internap) and healthcare companies. Indeed, during 2020, Sabey Data Centers signed a 12 megawatt lease with Workday in Ashburn, Virginia. Additionally, in 2020, the company signed a 2 megawatt lease in New York City.
Sabey Data Centers will use the capital investment from John Hancock to fund development expansions of its data center portfolio in major U.S. markets. Specifically, the company has 40 megawatts of potential power capacity ready to develop at its campus in Ashburn, Virginia. Furthermore, Sabey Data Centers has over 35 megawatts of potential power capacity ready to develop in Seattle, Washington.
Northern Virginia – Data Center Market
Sabey Data Centers’ Ashburn expansion is within a sub-market of Northern Virginia, which is the largest data center market in the United States in terms of supply, at 1,275 megawatts. Demand in Northern Virginia is strong, shown by large hyperscale requirements from companies like Microsoft Azure and Facebook.
However, Northern Virginia is a very competitive market. Moreover, a significant number of private data center providers have entered the market recently. For example, new data center entrants to Northern Virginia include CloudHQ, Compass Datacenters, EdgeCore, and STACK Infrastructure. Indeed, these new private data center operators are in addition to competition from large public players like Digital Realty, CyrusOne, and Equinix.
Sabey Data Centers – Prior Financings
Sabey Data Centers’ partnership with John Hancock closely follows another major financing initiative the company completed less than 12 months prior. Specifically, in May 2020, Sabey Data Centers raised $800m through securitized notes to refinance its existing credit facility and help fund its expansion plans. Importantly, the securitized notes are rated investment grade at A+ by Standard & Poor’s.
John Hancock Life Insurance – Digital Infrastructure Investments
Overall, John Hancock Life Insurance Company has been an active investor in the digital infrastructure sector. Firstly, in July 2018, John Hancock purchased a minority interest in tower company Phoenix Tower International from Blackstone Tactical Opportunities. Secondly, in October 2020, John Hancock acquired a 30% minority stake in ExteNet. Indeed, ExteNet is the largest private owner of distributed antenna systems (DAS) and small cell networks in the United States.