Real Estate Market Update:

Data Centers
Summer 2024
General Trends in the Data Center Sector

01 02 03 04
Hyperscale Spend AI/ML Drives Focus on Power Site Selection
Driving Growth HPC Builds and Sustainability Criteria Evolving
Data center development has shifted to focus on AI/ML applications have the potential to become The U.S. has lagged Europe and other regions on “Edge” applications, access to power, network
large-scale facilities for hyperscale customers— the fastest-growing customer segment; ESG-focused mandates; however, that is strategies, sustainability, and geo-agnostic
5 to 10 hyperscale companies represent most of applications/hardware require an evolution in changing. There will be increased focus on applications are expanding where and how data
the wholesale colocation consumption, and they data center design in terms of density, flexibility, directly fed renewables, other sustainability centers are deployed. Master-planned data
favor a limited number of well-known and well- and sustainability. AI adoption and an measures, and, ultimately, on-site power center parks have become an increasingly utilized
capitalized developers/operators. Each hyperscale acceleration in requirements are leading to a new generation. AWS recently acquired Talen’s strategy to solve land and power supply
cloud provider is projecting significant increases phase of large-scale hyperscale growth, with nuclear data center campus in Pennsylvania constraints as companies look for new markets
in capex in 2024. several new operators deploying GPU-based which has 960 MW of available clean, carbon-free with large quantities of land, power, and
services that are driving significant demand for power provided by Talen’s on-site nuclear power renewables.
data center capacity. station.

05 06 07 08
Rent and Capitalization Development New Investor Data Centers
Rate Trends Trends Categories Forecast
Real estate capitalization rates in the data center As of late 2023, a record 3,077 MW of data center Infrastructure funds, real estate investors, and The increasing influence of AI, expanding global
industry have remained stable, supported by capacity is under construction in primary markets, even funds traditionally focused on energy have demand, and a deceleration in energy efficiency
strong investor interest and confidence in the representing a 46% year-over-year increase. Data entered the sector, pushing down yields and improvements are expected to drive a significant
sector’s long-term growth. Market rent trends are center developments are rapidly expanding, with increasing multiples (before the current debt rise in global power demand from data centers,
on an upward trajectory, driven by the increasing a notable rise in hyperscale facilities to meet the markets) as they expand the definition of more than doubling by 2030. Goldman Sachs
demand for data storage and processing due to growing demand for cloud computing and digital “infrastructure” and chase new categories given anticipates a 15% compound annual growth rate
the expansion of cloud computing and digital services. Additionally, there is an increasing focus the cyclical nature of their traditional sectors, in data center power consumption from 2023 to
services. This robust demand has led to on sustainability, incorporating renewable energy among other issues. 2030, suggesting that by the end of the decade,
competitive pressures for high-quality assets, and efficient cooling technologies to minimize data centers could account for approximately 8%
further solidifying the sector’s attractiveness environmental impact. of total U.S. electricity demand, compared to
to investors. around 3% at present.

Sources: CBRE, Goldman Sachs. Press Releases.

2
Major Data Center Markets
The location of data centers is crucial, often strategically chosen near major urban centers Major Data Center Markets
or network hubs to optimize connectivity and minimize latency for digital services. Digital Infra: U.S. Data Centers (2024) Data Centers Megawatts
Northern Virginia, Virginia 300 3,945
Factors Contributing to Markets’ Prominence
Phoenix, Arizona 100 1,380
• Power Availability: Availability and reliability of electrical power in a location, including the capacity of the local power
Dallas, Texas 150 1,125
grid to supply the high energy demands of data centers.
Atlanta, Georgia 80 1,065
• Connectivity: Network infrastructure available at a location, including internet bandwidth, fiber optic networks,
and proximity to major internet exchange points. Chicago, Illinois 110 805
Northen California (Silicon Valley), California 160 790
• Cost Efficiency: Cost of operating a data center in a particular location, including real estate, energy prices, taxes,
and labor costs. Portland (including Hillsboro), Oregon 50 540

• Environmental Stability: Physical and climatic conditions of a location, including the risk of natural disasters New York and New Jersey 145 450
and the ambient climate. Seattle (including Quincy), Washington 70 395
• Land Costs: Lower land costs reduce initial capital expenditure and make it easier to acquire large plots for future Los Angeles, California 65 220
growth. This often leads to data centers being located in less central but more affordable areas. Total 1,230 10,715
• Tax Incentives: Tax incentives lower the overall cost of operating a data center by reducing taxes on property, sales,
and income. They are a key factor in making certain locations more attractive for data center investment.
Seattle

Opportunities Portland
New York &
• Virginia: Greater power capacity is available outside Northern Virginia, such as in Central Virginia. New Jersey
Chicago
• Silicon Valley, California: Expanding into new local markets could help address the capacity issues Santa Clara
Northern
and Silicon Valley Power face. Silicon Valley Virginia
• Dallas/Fort Worth, Texas: Markets are experiencing delays due to supply chain and power supply issues. Developer
demand has been strongest in South Dallas.
Los Angeles Phoenix Atlanta
• Chicago, Illinois: Cloud service providers (CSPs) prefer close proximity to end-users, so Chicago is expected to see Dallas
additional demand.

Sources: Dgtl Infra, CBRE Global Data Center Trends 2023.

3
New Strategies Emerging to Solve Power and Land Constraints
Data center site selection has been meaningfully disrupted by power and land constraints, resulting in new strategies solely focused on unlocking
land and power for data center development.

H I STO RI CAL DATA CEN T ER D EM AND CRE AT I NG PO WER NE W ST RAT EGI ES TO UNLO CK
SI T E SELECT I O N CRI T ERI A AND L AND CO NST RAI NT S PO WER AND L AND SUPPLY
• Historically, data center developers’ selection criteria • In 2023, data center demand hit an all-time high with more • New operating platforms have been formed to develop
have been focused on: than 4.8 GW of absorption across primary and secondary master-planned data center campuses in response to the
markets in North America. rapidly increasing requirements of hyperscale infrastructure
1. Economic incentives.
amid power and land constraints throughout North America.
• New demand from generative AI and machine learning
2. Proximity of major internet exchange points in major
requires tremendous amounts of power, prompting – Operators pursuing this model, such as Quantum
metropolitan areas.
a fundamental shift in the design and site selection approach Loophole, are focused on solving the industry’s capacity
3. Metro fiber availability, fiber latency, and workforce for data centers. constraints by acquiring large quantities of real estate,
availability. power, and water, and taking care of the difficult
• With power requirements for data centers growing
predevelopment work, such as permitting and regulatory,
4. Utility power costs and capacity. exponentially, North America is seeing a scarcity of supply
that is now a multi-year process.
driven by regional power limitations which is a threat to slow
5. Land cost.
down industry growth. – These companies plan to monetize parts of their
• Initially, site selection was primarily focused on fiber campuses by selling them to a hyperscaler or data center
– Power has become increasingly hard to acquire with
connectivity and proximity to an IX, and as a result, data operator, who will then focus on the construction and
utilities warning of shortfalls even for already
centers became concentrated in major markets. operations of the data center.
provisioned customers.
• As data center developments continued to grow in size • As power utilities remain short on available power, on-site
• As a result, data center developers are being forced to be
and cost, developers began pushing into newer, power generation remains another alternative for data center
more creative, focusing their site selection search primarily
secondary markets, in search of more favorable developers to resort to.
on the availability of power on the grid.
development economics.
– AWS recently acquired Talen Energy’s 960-MW, nuclear-
• Developers rarely ran into issues with power availability at powered data center campus in Susquehanna,
sites that fit the above criteria and, therefore, assumed the Pennsylvania. This transaction validates the trend of data
power utility would always serve electrical power upon center operators seeking alternative strategies to obtain
their request. large amounts of power capacity needed to fulfill
AI demand.

4
 Nvidia Stock Price Performance and Other Key AI Investment Milestones
Rapid Growth of Data Centers Lambda secures
NVDIA S&P 500 $500M loan with
Nvidia chips as
The data center industry is experiencing rapid growth, driven by soaring collateral 615.85%
QScale raises
demand for cloud computing and digital services, with significant $130M from
Aligned to CoreWeave raises
investments in hyperscale facilities and sustainable technologies. develop HPC DCs Lambda raises
$320M to
$7.5B in debt for
AI infrastructure
build a GPU
Cloud for AI
CoreWeave CoreWeave
General Trends $400M $2.3B
debt facility
Series B CoreWeave $642M
financing at minority investment at
• Cloud Computing, Big Data, and IoT: These technologies require massive amounts of data $2.1B ~$7B valuation
processing and storage, necessitating more data centers to handle the workload. valuation
OpenAI
• Advancements in AI and Machine Learning: These technologies rely on vast datasets and $10B
financing
computational power, driving the need for specialized infrastructure like data centers.
Together AI CoreWeave
raises $106M at a secures $1.1B in
• Demand Vastly Outpacing Supply: The exponential growth in digital activities and data creation $1.25B valuation Series C funding
36.28%

has created a significant gap between the supply of data center capacity and the increasing
demand for it.

Sep-23
Dec-22

Jan-23

Jul-23

Dec-23

Jan-24

Jul-24
Mar-23

Apr-23

Oct-23

Mar-24

Apr-24
Jun-23

Jun-24
May-23

May-24
Feb-23

Nov-23
Aug-23

Feb-24
• Rising Rental Rates: The pricing of North American data centers is rapidly increasing due to strong
demand and a supply shortage. Average asking rates for a standard 250–500 kW capacity in all
four major North American markets rose by 20% year-over-year, marking the highest global
Capex Spend by Hyperscalers
increase
The top four hyper scalers are projected to invest $213 billion in 2025, a 1.5x increase and 23% CAGR
• Lucrative Development Opportunities: The expanding need for data centers presents profitable from 2023.
opportunities for developers and investors due to sustained demand and high occupancy rates.
2023A 2024E 2025E
• Unlevered Returns (IRRs) Highest Among All Property Types: Data centers offer attractive $62.3
$67.5
$59.6
investment returns due to their critical role in supporting digital infrastructure and the $48.3 $51.8 $48.9 $50.6
consistent demand for their services. $41.6
$35.2 $37.3
$32.3 $28.3

Sources: S&P Capital IQ, PitchBook, Wall Street Equity Research, CBRE Global Data Center Trends 2024. Amazon Microsoft Google Meta
Note: This presentation does not constitute advice or a recommendation, offer, or solicitation with respect to the securities
of any company discussed herein, is not intended to provide information upon which to base an investment decision, and
should not be construed as such.

5
Data Center Transaction and Capitalization Rate Trends
Transaction volume and investor interest in data centers have been high, with significant activity driven by the increasing demand for digital infrastructure
and the strategic importance of data centers in supporting cloud services and online activities.
Market Update
• Total transaction volume of all North American data center asset sales was Data Center Capitalization Rate Transactions and Investments
$4.8 billion in 2023, a 29% year-over-year increase.
Market Transactions City State Sale Date Sale Price Cap Rate
• 2024 is expected to see an uptick in capital markets activity due to growing
Buyer/Investor
development pipelines and improving lending markets.
Amazon (CBRE) Sterling VA Jun-2024 $135,750,000 N/A
• Supply constraints for potential buyers revolve around the balance of in-
CenterSquare Investment Management West Jordan UT Apr-2024 $600,000,000 N/A
place inventory and pre-leasing demand for new development.
Mitsubishi Dallas TX Mar-2024 $200,000,000 N/A
• Through May 2024, there have been about $4 billion in ABS issuances
Amazon (Talen Energy) Salem Township PA Mar-2024 $650,000,000 N/A
related to data centers globally. Borrowing rates have trended around a
Starwood Capital Group (Echelon) Dublin IR Feb-2024 $850,000,000 N/A
150–250 bps spread compared to risk-free rates.
GI Partners JV Chicago IL Jan-2024 $900,000,000 6.50%
• Notable market participants in the second half of 2023 include Blackstone,
Realty Income JV Northern Virginia VA Nov-2023 $249,717,000 6.90%
TPG Real Estate, Brookfield, and Realty Income.
TPG Real Estate Partners JV Northern Virginia VA Jul-2023 $1,500,000,000 6.00%
• 6.00% cap rates are feasible despite a 5.3% debt base rate due to AI-driven
GI Partners JV Chicago IL Jul-2023 $900,000,000 6.50%
rent increases, which have caused rates to double, reversing the historical
Dallas Powered Shell Dallas TX Jun-2023 $150,000,000 5.50%
trend of flat or declining rates in the data center market.
Ashburn Turn-Key Data Center Ashburn VA Apr-2023 $150,000,000 5.50%
North America Data Center Transaction Volume ($ in Billions) NoVA Powered Shell Portfolio Various U.S. Jan-2023 $275,000,000 5.50%
Data center transaction volume for 2023 was up 67% from 2022. NoVA Powered Shell Portfolio Various U.S. Aug-2022 $205,000,000 4.50%
$5.3 Switch Data Centers Various U.S. May-2022 $10,700,000,000 5.90%
$4.5 $4.6
Manassas, VA Data Center (DC-6) Manassas VA Jan-2022 $225,000,000 5.10%
$3.4 $3.2 CyrusOne Houston Portfolio Houston TX Jan-2022 $670,000,000 6.50%
$2.7 $2.9 $2.8
Low 4.50%
$1.6 $1.5 High 6.90%
Median 5.90%
Mean 5.85%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Sources: JLL Research Reports, Evercore Research Reports, S&P Capital IQ, Confidential National REIT Research Company, Digital Realty 3Q23, 4Q23, and
1Q24 Financial Results, CBRE Insights.
6
Historical Data Center Private Transaction Multiples
Historical data center private transaction multiples have shown resilience and growth, reflecting sustained investor confidence in the sector’s robust demand
and strategic importance in the digital economy.
TEV/LTM EBITDA
($ in Millions)

Year 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2023 2023 2023 2023 2024 2024

Target
$3,500 $2,500 $326 $420 $10,000 $300 $204 $15,000 $10,100 $3,000 $1200 $858 $3,500 $670 $10,500 $4,400 $1,800 $3,800 $5,500 $1350 $1500 $575 $1300
TEC

35.0x(1)
33.0x 33.0x
32.0x
30.0x 29.5x 30.0x 30.5x
28.0x
Mean: 26.5x
25.0x 25.0x 25.0x 25.0x
24.0x
25.9x 23.5x
22.0x 21.0x
20.0x 20.9x 21.0x
Median: 19.3x
25.0x
15.6x

2020 2020 2020 2020 2021 2021 2021 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2022 2022 2023 2023 2024 2024

Pittock
Building (Houston)

Sources: S&P Capital IQ, 451 Research, public filings, other publicly available information.
(1) Data4 valuation multiple was approximately 21x on an NTM EBITDA basis. The 35x multiple displayed above is on an LTM EBITDA basis.

7
Data Center Development, Discount Rates
and Yield on Cost Market Update
The data center development pipeline is robust, with numerous projects Data Construction Market
underway globally to meet the escalating demand for cloud computing and
CAGR
digital services, supported by advancements in technology and infrastructure. (2022–2030)

Data Center Development Market Update Yield on Costs 9.2%

Market Size in USD Billions

• As of late 2023, a record 3,077 MW of data • Digital Realty’s Q4 2023 financial results
58.33
center capacity is under construction in and recent engagements by Houlihan
primary markets, representing a 46% year- Lokey have indicated data center 26.23 28.81
over-year increase. development yields ranging from 9.5% to
10.5%.
• Despite challenges with power supply, the
inventory of North American data centers Development Discount Rates
expanded by 24% year-over-year in Q1
• Recent engagements completed by
2024, with an addition of 807 MW across
Houlihan Lokey have indicated
Northern Virginia, Chicago, Dallas, and 2018 2019 2020 2021 2022 2023 2024 2025 2026 2030
development discount rates ranging
Silicon Valley.
from 17% to 20%.
Data Center Construction Costs Data Center Development Economics
• RCLCO reported that developers target Development profit margins
• Costs per market vary greatly for stabilized leveraged IRRs ranging from 12% are in the 50%–65% range.
Low High
data centers. to 19% or more, depending on the risk
profile of the opportunity.
• Typically, constructing a data center ranges 25%
from $600 to upwards of $1,100 per gross • Equinix anticipates achieving intern rates of
square foot or between $7 million and return (IRR) in the mid-to-high teens for 20%
20.00%
$12 million per megawatt of commissioned hyperscale deals underwritten. 17.00%
IT Load. 15%
Development Profit Margins
Data Center Capitalization Rates 10.50%
• Recent engagements completed 10% 9.50%
9.50%
8.50%
• Most recent data center deals are trading by Houlihan Lokey have indicated 7.50%
between a 5.5% and 7.5% cap rate range, development profit margins in the 5% 5.50%
depending on the asset type. 50% to 65% range for colocation and
hyperscale facilities. 0%
Sources: Newmark, Costar, CBRE, Digital Realty 4Q23 Financial
Results, RCLCO, Data Center Knowledge, Precedent Research. Capitalization Rates Unlevered Stabilized Yield on Costs Development Discount
Discount Rates Rates
8
Case Study | Arkon Energy
Houlihan Lokey provides extensive and specialized support across a broad spectrum of transactions across the global data center industry. This
includes expertise in mergers and acquisitions, strategic restructuring, capital raising, valuation, and a wide array of additional essential services
tailored to meet the unique needs of clients worldwide.

Client Profile
Founded in 2021, Arkon Energy stands out as a prominent digital infrastructure firm specializing in the acquisition, development, and operation of data centers crucial for
supporting the Bitcoin network. The company distinguishes itself through a strong emphasis on efficiency and flexibility, crucial attributes for navigating the dynamic market
cycles inherent in the digital infrastructure sector. Arkon Energy is dedicated to establishing itself as a leader in shaping the future of digital infrastructure, driven by its
commitment to innovation and sustainable growth in the rapidly evolving landscape of digital currencies and data management.

Our Role
Houlihan Lokey’s report involved analysis, market research, and pricing conclusions on the current state of Arkon Energy’s owned bitcoin mining facilities. Houlihan Lokey
further analyzed the potential costs to convert the current properties into Tier-3 data centers and the respective pro forma changes that would occur for the properties to
operate under the use of a hyperscale tenant. Overall, prospective and illustrative value conclusions were provided for the data centers if they were to continue operations as
bitcoin mining facilities through the prospective development phase into Tier-3 data centers, and upon completion of the hypothetical conversion and development process.
Valuation Analysis

9
Case Study | QScale Key Stats
Strategic Investment for Leading High-Performance Compute Data Center Developer 142 MW
Secured Power
June 2023 Company Overview
Capacity
• QScale, founded in 2018, is a world-class, sustainable, high-performance computing data center developer and operator headquartered in
Levis, Quebec, Canada. It is led by executives with decades of experience and relationships across the global digital infrastructure ecosystem.
– QScale develops environmentally responsible, high-density data centers (HDDC) for applications such as high-performance computing
(HPC) and machine learning. Its technology infrastructure helps meet the growing computing needs of global companies while enabling
96 MW
has received a growth equity
them to achieve their ESG objectives. Projected IT Capacity
(8 Phases of 12 MW)
investment from

– HPC deployments have very different needs and require designs differentiated from traditional hyperscale and enterprise data centers in
terms of density, space, redundancy, and cooling, all built around flexibility and scalability.
• QScale is actively constructing its first data center campus, with the first 12 MW phase being completed in April 2023. Given significant
customer demand, Phase 2 (12 MW) construction has commenced and is expected to be completed in 2024.
68+
– The first campus is being built in Quebec, a geographically advantageous market where power, connectivity, climate, real estate, and
Lead Financial Advisor and Placement Agent

Acre Campus
political benefits converge to drive optimal data center unit economics and scalability.
– The company owns the right to acquire parcels in additional markets with similar characteristics in which it plans to develop its future
deployments.
April 2023
Transaction Overview Commissioning of
• QScale has received a strategic investment from Aligned Data Centers, a leading hyperscale data center developer in North America and portfolio company of Macquarie Asset
Phase 1
Management. The investment will support the development of future phases of QScale’s flagship Q01 facility and the development of future campuses.
• The transaction offers compelling value for the company and significantly de-risks various areas of execution by providing access to:
– Hyperscale customers with a playbook for deployments; $1B+
– A large balance sheet and cheap debt in a high-interest rate environment; Expected Cumulative
Capital Expenditures
– Key vendor relationships to accelerate the purchase of materials and equipment as supply chain challenges persist; and
– A trusted, experienced partner in Aligned that has best-in-class facilities and operational expertise.
• This transaction closed in June 2023.
Houlihan Lokey was the lead financial advisor and placement agent for QScale. 100%
Liquid and Air Cooling

10
 Case Study | Colohouse
Acquisition Financing and Buyside Advisory for Leading Retail Colocation Platform
March 2024 Company Profile
Colohouse is a retail colocation, cloud, security, and managed service provider with more than 25 locations in over 20 cities in North America, Europe, and Asia. The company
offers a full suite of services giving customers the flexibility to customize their IT infrastructure needs to meet their business objectives. Valterra formed the Colohouse
platform in 2020, and the Hivelocity acquisition represents the seventh acquisition since 2021. Colohouse’s acquisition strategy has been focused on acquiring regional
a portfolio company of colocation and managed service providers to create a national platform to provide customers with a full set of digital infrastructure solutions.

has acquired Hivelocity is one of the largest and fastest-growing pure-play, bare metal cloud providers in North America. The company owns and operates a modern inventory of more
than 11,000 servers across over 30 data center locations around the world. Colohouse’s acquisition of Hivelocity adds a highly complementary bare metal product offering
Credit Facility &
Equity Financing that has been one of the fastest-growing segments within the data center sector. The combined platform of Colohouse and Hivelocity creates a retail colocation, cloud,
Acquisition Financing managed services, and bare metal platform of significant scale with more than 40 locations and over 7,000 customers, rivaling a scarce number of middle-market players
Buyside Advisor & Exclusive Placement Agent within the data center sector. This strategic move combines the portfolio of two well-established providers with a focus on cloud and bare metal services to meet growing
market demand.
Acquisition Financing
Our Role
Houlihan Lokey served as the buyside advisor and exclusive placement agent to Colohouse, assisting the company in arranging, structuring, and negotiating the financing to
support its acquisition of Hivelocity.

Transaction Snapshot
The financing highlights Houlihan Lokey’s success and momentum in simultaneously raising debt and equity capital to arrive at an optimal capital structure solution.
Together, the Capital Markets Group and Digital Infrastructure Group were able to achieve exceptional results for the client, including (i) obtaining a committed financing
package within a tight time frame to adhere to Hivelocity’s sellside M&A process, (ii) driving a highly competitive financing process that maximizes proceeds and liquidity to
Colohouse at close, (iii) structuring the deal to minimize cash debt service requirements for Colohouse so the company could focus on growth initiatives post-merger, and (iv)
minimizing dilution and the cost of capital for existing equity investors in Colohouse.

11
Case Study | Quantum Loophole
Building the Largest Data Center Campus in North America

Process Background
• Quantum Loophole, Inc. (QL) is a developer of gigawatt-scale data center campuses for hyperscale cloud, colocation, and related service providers. QL’s model is building the
first-of-its-kind master-planned data center community allowing customers to reduce deployment times and costs while achieving scalability often unavailable in traditional
deployment markets. QL will provide its customers with land, fiber, power, and water at massive scale to accommodate 15–20 years of data center development.
has raised $13,370,000 in equity
• Financing milestones:
2020 financing from

PRIVATE INVESTORS
1. Seed—two separate seed financings in 2020 to fund the initial stages of the company, including assembling a top-tier management team and beginning site selection.
2. LandCo—in June 2021, QL entered into a joint venture agreement with TPG Real Estate Partners (TREP) to close on a 2,100-acre plot of land in Frederick, Maryland, where
the first campus development will launch (LandCo). In connection with this venture, TREP has also acquired a minority stake in QL.
Financial Advisor • JV formed with a GP/LP structure with a 90%/10% pro-rata split and includes a real estate promote structure that increases the GP’s profit share as the project surpasses
higher return hurdles.
3. FiberCo—in April 2023, QL entered into a joint venture agreement with TREP to build a hyperscale fiber ring called QLoop with the goal of providing mass-scale
connectivity to the Leesburg and Ashburn markets from QL’s Frederick campus. The ring will use a patented conduit and duct system that will extend more than 40 miles,
cross 90 feet beneath the Potomac River, and include more than 200,000 strands of fiber.
• JV formed with a similar GP/LP structure as the LandCo JV but with a 70%/30% pro-rata split. Also includes a similar real estate promote structure that increases the GP’s
profit share as the project surpasses higher return hurdles.
Houlihan Lokey served as the exclusive financial advisor to Quantum Loophole in all three financings.

has entered into a joint venture with

2021 Process Challenges

and received a minority equity
investment from

• Raised more than $200 million of capital to date for a first-of-its-kind business model, centering around a property and fiber ring of unprecedented scale in a nontraditional
data center geography.
Exclusive Financial Advisor • TPG funded the acquisition of the Frederick property long before the property had been properly entitled and before having contracts with customers.
• Houlihan Lokey has leveraged various firm resources to drive exceptional outcomes for the client including (i) Real Estate Group: deal and legal structuring for land sale, (ii)
Financial Sponsors Group: extensive investor knowledge for market outreach, (iii) Power & Utilities Group: consulting on planned power entity, and (iv) Tax Advisory: consulting
on proper tax accounting for the transaction.

12
Case Study | American Tower
Creating a First-of-Its-Kind Converged Infrastructure Platform
Houlihan Lokey’s Digital Infrastructure team added significant value in helping American Tower (AMT) execute its data center growth strategy, including educating AMT
on retail colocation, interconnection, and regional as the edge. Houlihan Lokey played a key advisory role in the valuation, deal execution, and negotiations of two
transformative transactions in 2021.
CoreSite Footprint & Key Stats
October 2021 • On October 6, 2021, American Tower announced the acquisition of Silicon Valley Denver Chicago New York
Boston
DataSite, a premier retail colocation provider for corporate enterprises in 8 Data Centers 2 Data Centers 2 Data Centers 2 Data Centers
1 Data Center
growing markets. 3 On-Ramps 3 On-Ramps 3 On-Ramps 1 On-Ramp

• DataSite owns and operates two world-class data center facilities located
in Orlando, Florida, and Atlanta, Georgia, that are expertly managed to
has acquired
meet the increasingly demanding requirements of modern computing
environments.
• The acquisition complements American Tower’s existing edge and Los Angeles N Virginia/DC
4 Data Centers
interconnect data center facilities in the region while advancing its 5 On-Ramps
5 Data Centers
6 On-Ramps
platform expansion strategy.
Buyside Advisor

Houlihan Lokey served as the exclusive financial advisor to American Tower. Miami
1 Data Center

November 2021 • On November 15, 2021, American Tower announced the acquisition of
CoreSite, a Denver, Colorado-headquartered real estate investment trust
24 ~4.6M 42 252 MW 1,375+ 32k+
that owns, develops, and operates strategically located data centers, for Facilities NRSF On-Ramps Power Capacity Customers Interconnects
a total consideration of $10.1 billion, including CoreSite’s existing debt.
• Key strategic benefits of the combination include:
• The transaction brings together American Tower’s wireless connectivity  Strengthened ability to win at the edge; approximately $3 billion TAM (by 2026E).
at the mobile edge and CoreSite’s highly interconnected data center
has acquired

 Establishes American Tower as a leader across multiple classes of communications real estate
facilities at the core edge.
as 5G and wireless/wireline convergence accelerates.
• The transaction represents the most notable and transformative concept  Couples CoreSite’s interconnection and CSP relationships with American Tower’s existing
Buyside Advisor of tower/data center convergence under a single ownership umbrella. distribution capabilities to pursue the edge opportunity with potential for international
expansion.
Houlihan Lokey served as a financial advisor to American Tower.
 Revenue opportunity by connecting American Tower’s existing tower sites to CoreSite’s data
center and edge facilities.
13
 Leadership
Houlihan Lokey’s Real Estate Expertise Gary Gordon Brian Pryor
Houlihan Lokey has a successful track record of assisting its clients—comprising real estate investors, owners, Managing Director Managing Director
Technology
Real Estate, Lodging,
and other stakeholders—with various transaction, special situation, and valuation needs. and Leisure BPryor@HL.com
GGordon@HL.com +1 650.996.7295
Investment +1 212.497.4258
Banking
We have a track record of structuring and We run efficient, momentum-driven We advise clients on strategic alternatives Jeffrey Andrews, MAI Prashant Kamath
executing value-optimizing transactions for processes that drive results in M&A and that enable them to accomplish next-level Director Director
our clients. capital raising for both healthy corporate strategic goals—whether the aim is Head of Real Estate Real Estate Valuation
finance and restructuring transactions. accelerated growth or divestiture—for and Advisory
Valuation and Advisory
PropCo and/or OpCo structures.
JAndrews@HL.com PKamath@HL.com
+1 310.788.5364 +1 718.249.577

Josh Schainker Nick Way, CPA

Our team of experienced investment We are well versed in crafting tailored We are uniquely positioned to help address
bankers has extensive and expansive reach solutions to achieve client objectives, with special situations, ranging from liquidity Director Director
of traditional and nontraditional real estate deep experience across sectors, company management to recapitalizations. Real Estate, Lodging, Real Estate Valuation
debt and equity investors around the world. types, and market cycles. and Leisure and Advisory
JSchainker@HL.com NWay@HL.com
+1 212.497.4178 +1 650.619.0430
Valuation
and Advisory Leo Kao, MAI Abe Bui
Services We have deep valuation expertise in We advise boards of directors and special We value large portfolios of real estate Senior Vice President Vice President
investment, financial reporting, and tax committees as they navigate a range of equity and debt positions and offer bespoke Real Estate Valuation Technology
matters. strategic situations and challenges. valuation services (e.g., positive assurance) and Advisory ABui@HL.com
to help clients mitigate valuation risk. LKao@HL.com +1 206.949.3842
+1 310.383.1231

Leveraging our accounting and real estate Our bench of experts includes dispute We provide fairness opinions, solvency
Contact us
expertise, we help clients with transaction resolution counselors to advise on valuation opinions, and valuation opinions to clients Please reach out to one of our team members
advisory services related to real estate equity matters involving disputes, mediation, across a variety of property- and entity-level to discuss this quarter’s market update or to
and debt investments. arbitration, and litigation. transactions.
explore how we can serve your business needs.
Contributing Authors: Joseph Hobbs

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