By Elias Schisgall
Realty Income is forming a new joint venture to invest in artificial-intelligence data-centers, beginning with an initial acquisition of stakes in three data centers.
The venture is being formed with Cloud Capital and an unidentified global institutional investor, Realty Income said.
Realty Income said it expects to invest over $1.4 billion over time in the venture, with initial investments of around $700 million expected between the second and third quarter.
The company said it will acquire a 45% stake in the venture's first portfolio asset, a data center in Northern Virginia which is fully leased to an investment-grade hyperscale tenant. It also agreed to acquire similar interests in two other data centers currently in development.
Cloud Capital will have a minority stake in the portfolio and provide property and development management services through its CloudHQ business, Realty Income said.
The three data centers are together valued at more than $6 billion, the company said.
The venture is likely to pursue future investments in data centers, Realty Income said.
"We are pleased to advance a scaled digital infrastructure platform while deepening our programmatic relationship with Cloud Capital, which is vertically integrated with CloudHQ, a best-in-class developer and operator," Chief Executive Officer Sumit Roy said. "The combination of high-quality data center assets leased to investment-grade tenants, long-duration triple-net leases, and an attractive return profile reflects our disciplined approach to capital allocation and value creation."
Write to Elias Schisgall at elias.schisgall@wsj.com