TPG Real Estate Partners (TREP), the real estate arm of private equity firm TPG, and Quantum Loophole, a hyperscale data center developer and operator, today announced the formation of a joint venture to acquire land in Frederick County, Maryland (~25 miles north of Ashburn, Virginia) from Alcoa and to develop the site into a 1-gigawatt data center.
As part of the joint venture, TPG Real Estate has acquired a minority ownership stake in the Quantum Loophole business.
Data Center Development – Quantum Loophole and TPG Real Estate
The joint venture between TPG Real Estate and Quantum Loophole has closed on the purchase of an ~2.1k acre (3.3 square mile) land plot in Frederick County, Maryland. Specifically, TPG Real Estate and Quantum Loophole purchased the site for $100m in cash from Alcoa Corporation (NYSE: AA). Indeed, the site was formerly Alcoa’s Eastalco aluminum smelter, which permanently closed in 2010.
In terms of valuation, TPG Real Estate and Quantum Loophole are paying $47.6k per acre.
The site which is located at 5601 Manor Woods Road in Frederick, Maryland has industrial zoning and access to 1-gigawatt of transmission power capacity.
Since the aluminum smelter’s closure, Alcoa has prepared the site for re-development. This includes removing former facilities, completing remediation activities, and grading the site’s land.
Quantum Loophole anticipates developing data center modules with 30 to 120 megawatts of power capacity in less than nine months.
Quantum Loophole will construct a robust fiber ring, with regional interconnection points, to enable large-scale data traffic transmission.
TPG and Quantum Loophole are targeting hyperscale (e.g., Amazon Web Services, Microsoft Azure, and Google Cloud), telecommunications, enterprise, and colocation customers.
Management and Board of Directors – Quantum Loophole
Quantum Loophole is led by its founder and CEO Josh Snowhorn. He previously held executive positions at Terremark (acquired by Verizon), Cincinnati Bell, and CyrusOne.
Additionally, the company’s board of directors includes Gary Wojtaszek, formerly the CEO of CyrusOne. Finally, Quantum Loophole’s executive advisors include Jay Adelson, a founder of Equinix.
Market Overview – Frederick County
TPG Real Estate and Quantum Loophole are developing the 1-gigawatt data center in Frederick County as part of the Livable Frederick Master Plan. In exchange for tax incentives, the plan aims to bring new employment and opportunities for local businesses to the county.
The joint venture views Frederick County as a growth outlet for the Northern Virginia data center market. Indeed, the site will be within less than 1-millisecond, via fiber connection, from Northern Virginia’s Internet ecosystem.
Transaction Advisors – Quantum Loophole
Quantum Loophole’s financial advisor was Houlihan Lokey. Additionally, Quantum Loophole’s legal advisors were Jackson Walker and Offit Kurman.