CyrusOne Files for IPO as REIT

Cincinnati Bell (CBB) has filed for its data center subsidiary CyrusOne to make an initial public offering of $300 million of its common stock.

As Data Center Knowledge reported in May, Cincinnati Bell said that it may operate CyrusOne as a real estate investment trust (REIT), a corporate structure used by other large data center developers, and was analyzing that option.

A REIT is a corporation or trust that uses the pooled capital of many investors to purchase and manage income property. Income comes from the rent and leasing of the properties, and REITs are legally required to distribute 90 percent of their taxable income to investors. Three of the largest data center developers – Digital Realty (DLR), DuPont Fabros (DFT) and CoreSite Realty (COR) – are organized as REITs. The stock performance of the existing data center REITs, which gained between 14 and 30 percent in 2011, has continued to be strong in 2012.

Gary Wojtaszek, the President of CyrusOne, earlier this year said Carrollton, Texas-based company currently owns the real estate for about half its 20 data centers, but plans to eventually acquire the land for all of them.

Cincinnati Bell also said a portion of the proceeds from the initial public offering will be used to repay outstanding indebtedness of CyrusOne owed to Cincinnati Bell.

Morgan Stanley & Co. LLC and Bank of America/Merrill Lynch will act as joint book-running managers.

Also today, Cincinnati Bell reported its second quarter earnings, stating that CyrusOne's Q2 revenue grew 20 percent year-over-year.

In other news, CyrusOne announced this week it will add a third data center facility at its Houston West campus. The newest building is expected to be 120,000 square feet, with 24 megawatts of power capacity. The facility will be optimized for the high-density computing needs of the oil and gas industry, a historic focus for CyrusOne, and is expected to be completed in the first quarter of 2013.