Realty Income Corporation and Cloud Capital have created a joint venture with a global institutional investor to pursue a diversified portfolio of stabilized hyperscale data center assets. The partners have committed the venture to acquire three data centers as a seed portfolio, which is valued at more than $6 billion, according to the companies.
The joint venture is focused on large-scale data center properties that are already stabilized and leased to major hyperscale users. The assets are structured on long-duration triple-net leases, with tenants responsible for operating expenses, while the JV targets a return profile that Realty Income describes as consistent with its disciplined capital allocation strategy.
Sumit Roy, president and CEO of Realty Income, said the portfolio is characterized by high-quality data center facilities and tenants with investment-grade credit profiles. He noted that the combination of these lease structures and tenant quality supports the company’s objectives around predictable cash flows and value creation for shareholders.
Cloud Capital brings a long history in the data center sector to the partnership. Founder and CEO Hossein Fateh referenced more than three decades of experience investing in and leasing some of the world’s largest data centers across multiple market cycles. He emphasized the importance of acquiring and developing high-caliber facilities and maintaining durable relationships with tenants that rely on mission-critical digital infrastructure.
Fateh also highlighted that the JV’s strategy is intended to provide exposure to data centers that serve rapidly growing cloud and artificial intelligence applications. In his view, demand for these uses reinforces the strategic role of hyperscale facilities in global digital infrastructure, benefiting partners that are able to secure long-term commitments from major users.
As part of the initial transaction, Realty Income will acquire a 45% interest in the first portfolio asset. This property is a stabilized hyperscale data center located in Northern Virginia’s “data center alley,” a cluster widely recognized for its concentration of large-scale facilities. The asset is fully leased to an investment-grade hyperscale tenant under a long-term triple-net lease, aligning with the JV’s focus on credit quality and lease duration.
While the companies disclosed the value of the initial three-asset seed portfolio, they did not provide additional details on the individual properties, specific tenant identities or the JV’s longer-term acquisition pipeline. Terms of the capital structure beyond Realty Income’s 45% interest in the first asset were not disclosed, nor were any financing arrangements associated with the seed portfolio.
The launch of this joint venture marks a further move by Realty Income into the data center segment, working alongside Cloud Capital and a global institutional investor to scale ownership of hyperscale assets that support cloud and AI-driven demand under net-lease structures.
