Colony Capital Inc. agreed to buy a 20.4% stake in DataBank Holdings Ltd. from existing third-party investors for roughly $185 million.
The global investment management firm said in an investor update presentation that principals at digital infrastructure asset manager Digital Bridge Holdings LLC will keep their existing stakes in DataBank and give Colony the voting power to appoint a majority of its board.
Privately held DataBank owns and operates edge data centers across the U.S. Colony said the deal marks its first direct digital real estate investment out of its balance sheet and its first step to gaining exposure to the edge/co-location data center market with significant opportunities for organic growth and acquisitions.
Colony added that it plans to redeem its entire 6,114,205 outstanding shares of 8.25% series B cumulative redeemable perpetual preferred stock and 10.0 million outstanding shares of 8.75% series E cumulative redeemable perpetual preferred stock. The outstanding shares to be redeemed reflect a combined $403 million of the company's redeemable preferred equity with an 8.6% weighted average dividend rate, which will cut its total annual preferred dividends by $34.5 million, or 32%.
The redemption date is set at Jan. 10, 2020, and the per-share cash redemption price will be $25.00, plus applicable dividends.
American Stock Transfer & Trust Co. LLC is the redemption agent.