Colony NorthStar’s digital infra fund expected to top $3bn in final close – exclusive

The real estate investor’s debut digital infrastructure fund, in partnership with Digital Bridge, is on track to beat its fundraising target.

Colony NorthStar’s debut digital infrastructure fund is expected to exceed its $3 billion target and hold a final close by 30 June, two sources confirmed to Infrastructure Investor.

Digital Colony Partners, a vehicle Colony NorthStar is raising in partnership with telecoms infrastructure company Digital Bridge, has already made two investments, according to one of the sources, who did not disclose how much of the fund has been deployed. That source said another two to four investments from the vehicle are likely this year.

The fund is expected to hold a couple more closings before finishing fundraising by 30 June, according to the sources. A hard-cap has been set but it is unclear what that amount is.

Spokespeople for Colony NorthStar and Digital Bridge declined to comment.

Colony NorthStar, a Los Angeles-based real estate investment trust, and Boca Raton, Florida-based Digital Bridge came together last year to raise money for investments in data centres and cell towers. In March, Colony NorthStar said in its fourth-quarter earnings results the digital infrastructure fund had raised $1.4 billion and reached first close. It is unclear if the vehicle has a specific geographic focus.

One source told Infrastructure Investor the fund had attracted interest from sovereign wealth funds, insurance companies and pensions from around the world. One known LP is the Teacher Retirement System of Texas, which committed $200 million. Colony NorthStar has also committed $117 million to the fund through its subsidiaries, according to the earnings results.

As part of the first close, Colony NorthStar will transfer its interest in Andean Tower Partners, a South American cell tower owner and operator, to the fund. In October, the investment manager and Digital Bridge invested $200 million in ATP “for continued digital real estate infrastructure investment in the region”, according to Colony NorthStar’s third-quarter earnings report.

The fund could include a retail capital sleeve, sister publication PERE previously reported.

Digital infrastructure is seen by many as having high-growth potential as industries move to cloud-based data management and access to mobile networks continues to increase. Assets including telecom towers and data centres are attracting interest from both infrastructure and real estate investors.

“Just as we jump generationally from old technologies of cable wired underground to your phone in your pocket, the next wave of investment in that kind of infrastructure will be key,” Colony NorthStar chairman Tom Barrack told Bloomberg last year.