LANDMARK DIVIDEND
Investing in our Digital Future DIGITAL REPORT 2021
IN ASSOCIATION WITH:
LANDMARK DIVIDEND
INVESTING IN OUR
DIGITAL FUTURE Landmark Dividend helps to develop investment, ownership and operating structures in cloud, colocation and critical infrastructure
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he Digital Infrastructure team at Landmark Dividend collectively boasts decades of experience developing, owning and running data centers – working for the likes of Equinix and Digital Realty. Leading that team is Christof Hammerli, the former Director of Corporate Development for Equinix (the world’s largest IBX data center and colocation provider). “We might have competitors that, on paper at least, are bigger than us or have more capital available, but what differentiates us at Landmark is that we have a deep understanding of the industry from an operational perspective and can walk the walk and talk the talk with data center owners,” says Hammerli. “We’re not simply investment analysts, we speak their language. And it’s a specific technical language once you're on site. On the surface, it might be a real estate investment that you're making, but it’s a very specialized investment. I think our experience gives people on the other side of the transaction a lot of comfort that the group that's buying
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Christof Hammerli: Landmark Dividend
their data center actually knows what they're talking about and understands why this asset is mission-critical, and why it needs to be up and operational at all times. It makes a big difference and makes us a better buyer.” Agility & Expertise Landmark has the expertise and agility to handle transactions from a million to hundreds of millions of dollars (a recent 18-month period saw the acquisition of 16 data centers) and has a broad appetite across the spectrum from a risk perspective. “We acquire stabilized, core-type assets where there's a single tenant in place with a 10 to 15-year lease and very few moving parts,” offers Hammerli. “We also work with assets subject to very short leases, with tenants moving out or partial leasebacks in place, where we have a portion of a building that needs to be leased. In some cases, we take over operations with our partner, or provide a comprehensive service level 4
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agreement and actually take over ownership, to make sure that the equipment and infrastructure will deliver on expectations and provide the guaranteed uptime for the tenants to execute their businesses.” Hammerli believes Landmark’s flexibility makes the company a true partner. During the three years since he arrived at Landmark and put the Digital Infrastructure team together, more than 30 transactions have been closed with brokers, bankers, engineers, large operators and enterprises. “They know who we are, that we know the space and that we do what we say we’re going to do. When we agree to terms, they come back the exact same way from our attorneys and we don't take somebody to the closing table and re-trade at the last minute. That sets us apart from the competition much more so than us paying the highest price or having the cheapest capital.” Landmark Dividend is a partner for the longterm with many long-standing
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relationships with tenants over a decade or more. “In many cases we’ve known the CEO, CFO and CTO since a company’s inception and can offer the right advice and support for the challenging times we’ve experienced over the past year during the global pandemic,” says Hammerli. “Whether that’s looking at extending payment terms to navigate the step change of a COVID-19 world or improving sites. We don't buy an asset and let it sit there and merely collect the rent. We work actively with our tenants and partners to provide additional dollars to regenerate and expand sites to continue adding value to make sure these assets remain viable and keep up with the times. For example, you can increase power density or cooling. This approach positions Landmark well for success going forward, with continued growth expected in the U.S. and Canada, and international expansion, particularly in Europe.
Rising to the Challenge in a COVID-19 World Landmark saw its business double year-overyear in 2020 with industry growth accelerating
TITLE: HEAD OF DIGITAL INFRASTRUCTURE COMPANY: LANDMARK DIVIDEND INDUSTRY: TECHNOLOGY
EXECUTIVE BIO
European Expansion When COVID restrictions relax, Hammerli expects to hit the trail to Europe to push Landmark’s global expansion plans. “I grew up in Switzerland and worked in Europe as an equity analyst earlier in my career and later as Director of Corporate Development with Equinix, so I know the market well and have relationships with a number of the major operators,” he says. “It’s a natural move for the company to expand the portfolio and would be beneficial, not only for us, but also for many of our tenants and partners that have a global presence in Europe and the U.S. and need to provide a service across borders. We plan to set up a small team in Europe and actively source opportunities in the coming months.”
CHRISTOF HAMMERLI
Christof leads the Digital Infrastructure division at Landmark and has over 20 years of experience in various finance, risk management and corporate development roles. He is responsible for sourcing, negotiating and closing acquisitions with continued responsibility for asset and property management. Prior to joining Landmark, Christof was Chief Acquisitions Officer of Carter Validus. At CV he was instrumental in leading the development, acquisition, strategy and execution of two of the firm’s CV Mission-Critical REIT (Real Estate Investment Trusts) Data Center platforms. He was responsible for sourcing, negotiating, structuring and closing acquisitions, as well as strategic and operational leadership. Previously, Christof was Director of Corporate Development for Equinix, the world’s largest IBX data center and colocation provider, and the world’s largest public data center REIT (as measured by enterprise value), from 2007 through 2011, and before that worked for MetLife from 2004 to 2007, and Credit Suisse and Ernst & Young.
BCLP: MULTI-DISCIPLINARY DATA CENTER EXPERIENCE
JAMES GRICE @ BCLP LAW
MEETING THE LEGAL NEEDS OF THE DIGITAL INFRASTRUCTURE ECOSYSTEM ON A GLOBAL SCALE FROM M&A ASSET TRANSACTIONS TO ENERGY PLANNING The Data Center & Digital Infrastructure Team at international law firm Bryan Cave Leighton Paisner draws from a deep well of knowledge and experience to help clients address all aspects of mission critical development, including tax incentives, construction, acquisition and sales, financing arrangements, operations, leasing, subleasing and co-location along with environmental permitting, power purchases, power procurement strategies and agreements, user agreements, SLAs and maintenance agreements.
ADDING VALUE “We’ve structured our service offering to provide a comprehensive perspective on all the disciplines that are relevant to both the digital infrastructure investor and the developer, owner and operator,” explains BCLP Partner James Grice. “We’re a force multiplier for companies like Landmark Dividend seeking to scale as needed on their projects with everything from a compressed timeline on diligence to transactional real estate documentation for a build-to-suit.”
GLOBAL SCALE As a global law firm, BCLP can draw on a team of 1,400 professionals with one of the largest real estate teams in the world, allowing it to deploy resources when and where necessary. The ability to scale smartly sets the firm apart and leaves it well placed to meet the growing demand for digital services and the infrastructure required to support them. “The overall data center ecosystem is on the path to double digit annual growth in the foreseeable future,” forecasts Grice. “BCLP is in tune with the totality of that ecosystem and the infrastructure layer driving the internet, e-commerce and the digital economy. For example, the hyperscale market is forecast to grow by at least 25% annually over the next five years with many new investors trying to penetrate the space. We have the experience and skill to support the virtual layer with data security and software, while also focusing on the infrastructure layer needed to drive that digital growth. We’re going to see more division and subsets develop within the asset class. Whatever shape that takes, we’re well placed to navigate the marketplace.” bclplaw.com
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“ We have a deep understanding of the industry from an operational perspective and can walk the walk and talk the talk with data center owners.” CHRISTOF HAMMERLI HEAD OF DIGITAL INFRASTRUCTURE, LANDMARK DIVIDEND
due to the work from home/work from anywhere requirements. The need for greater connectivity affected all aspects of the digital world including a multitude of environments that need connectivity from hyperscale services or in the cloud and at the edge. Hammerli notes that closing transactions which require on-site appraisals has proved difficult, but business is booming. “Everything initially took longer than usual, but the team did an amazing job figuring out that puzzle and putting it back together, and we have actually closed a record number of transactions. Raising additional capital has been impacted by the COVID restrictions. While there is record interest from capital sources in the space, it's difficult to close a fund with new investors if they can't travel to see you or tour your sites.” 8
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Building a Business with Trusted Partners Mission-critical infrastructure investments require not only the expertise to drive frictionless connectivity across borders but also the boots on the ground to deliver vital support services. Landmark works with a trio of key partners: The company has in-house counsel but also teamed up with BCLP when the Digital Infrastructure division was launched, and they needed a legal partner to get to market quickly. Experts in negotiating data center leases, BCLP has a team dedicated to digital infrastructure and experience working with Fortune 50 companies and large enterprises. “BCLP has the bandwidth to handle the volume of transactions we're processing, with multiple deals in parallel, and negotiate contracts and service-level agreements (“SLAs”) with large operators.
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MARKING THE TRENDS
DID YOU KNOW...
“5G capabilities will bring new technologies that you and I don't even know that we need to have today,” reasons Hammerli. “And if we talked again in five years, we would say, ‘How did we ever do without it?’ These new technologies will need not only the 5G connectivity, but also the data centers behind it to handle, manipulate and store the data. I believe that this will drive the rise of edge computing, which in turn will drive data center growth overall.” Hammerli believes there’s more need for data center space at the edge… “There are two separate trends going on at the same time. One is clearly the edge and building comparatively small data centers in many locations, in every city. Yet, at the same time, we're seeing the opposite trend, where hyperscalers are building massively large, highly efficient data centers that are not only driving down the cost of compute, but also driving the efficiency of the data centers themselves, and making them
greener. So, fewer data centers, but much, much larger in size. Those are the data centers located on a campus that may offer 100 megawatts of power, for example, versus an edge data center, which may offer less than a megawatt, in terms of power only.” Hammerli also expects the colocation space to grow in between. “All of these different pieces need to be connected together, from the low latency that needs to be right where the end user is located, to the assistance in things like self-driving cars, all the way to the data that's on the largest scale that needs to be manipulated,” he notes. “Overall, I expect the space to grow. Over the last four years a massive amount of capital has expressed interest in investing in this space. Four years ago, investing in data centers was considered an alternative asset class. Today, we're starting to work our way out of that definition and more into a core food group where the largest investors all now have an allocation.”
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Our Experience Delivers Results. DH Capital is a private investment banking partnership combining deep industry expertise in digital infrastructure, telecommunications and SaaS having completed over 60 deals in the past 5 years aggregating over $18 billion in transaction value.
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“Four years ago, investing in data centers was considered an alternative asset class. Now it’s becoming a core food group for larger investors.” CHRISTOF HAMMERLI
Their expertise gives us the confidence that they know the difference between real and perceived risks. They’re deal-makers,” says Hammerli. “It’s our plan to grow internationally, so BCLP is a true partner that has the experience to represent us on that stage. They’ve also made introductions and opened doors for us.” DH Capital is a leading advisor to the data center and managed hosting sectors – having completed over 185 transactions totaling more than $30 billion. “They’re a niche investment banking firm within the digital infrastructure space,” explains Hammerli. “They’re one of the most important players – certainly the best connected with everyone from bankers
HEAD OF DIGITAL INFRASTRUCTURE, LANDMARK DIVIDEND
to operators to private equity groups. They’re very nimble at what they do and have been working with Landmark for the best part of the last ten years. They're incredibly creative partners and knowledgeable of the space. They provide great research for us and we work with them on a number of fronts. Mostly deal-based and transaction-based, where we engage with them in helping us complete a deal or where they represent a seller on the other side, and then work with us to finalize the transaction.” BCS is a Dallas-based end-to-end facility management solutions provider. “They’re landmarkdividend.com
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“ BCLP has the bandwidth to handle the volume of transactions we're processing, with multiple deals in parallel, and negotiate contracts and SLAs with large operators.” CHRISTOF HAMMERLI HEAD OF DIGITAL INFRASTRUCTURE, LANDMARK DIVIDEND
probably the most important factor for our tenants,” explains Hammerli. “They offer a complete turnkey solution where they provide anything from janitorial to security services, all the way through to infrastructure management and preventive maintenance. As landlords, we're not staffed or qualified to do this sort of work ourselves. Our customers and tenants interact with their teams on a daily basis so it’s an important relationship for us and a key extension of our service offering. They’re a true side-by-side partner and involved with us from the beginning on transactions as we look to negotiate SLAs. They have experience 12
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providing a range of services for systemically important data organizations that keep the country running, with every certification that could be required. They are trusted with the most important data in the world and are incredibly important to Landmark.” 2021 Landmark is planning to expand its portfolio in 2021, with a focus on larger acquisitions. “We want to build on our success from 2020 and deliver an even better year this year,” maintains Hammerli. “From a total acquisitions perspective, we're looking
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to grow that number again with portfolio acquisitions that include multiple data centers in one package. Traditionally, we focused almost exclusively on individual asset acquisitions where every transaction we closed was one building and one data center. With the help of our capital partners, we plan to pursue existing portfolios with as many as 15 assets in one acquisition.” Hammerli reveals that there will also be greater emphasis on buildto-suit hyperscale projects. “We’ll focus our efforts this year on brand-
new development opportunities with large enterprises, typically hyperscale providers, that are looking for new buildings, a new shell in a particular market, and we provide the capital – from acquisition of land to construction and all the way to take-out.” With the team Hammerli has put in place, and the bench depth of key partners at Landmark’s disposal, you should not bet against them in doubling down again this year.
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Landmark Dividend LLC
400 N. Continental Boulevard Suite 500 El Segundo, CA 90245
T 813-766-1889 | landmarkdividend.com
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