Landmark Dividend invests in, develops, owns and operates digital infrastructure assets...
The 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 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 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 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.
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.”
Rising to the Challenge in a COVID-19 World
Landmark saw its business double year-over-year in 2020 with industry growth accelerating 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.”
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. 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 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 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 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.”
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 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 build-to-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.