Real estate investor Castleforge, in collaboration with full-service data centre operator and advisory firm Galaxy Data Centers, has announced the acquisition of Redhill Data Centre, valued at over £100 million. This strategic partnership signifies Castleforge’s entry into the data centre sector, blending their operational real estate expertise with Galaxy Data Centers’ extensive industry knowledge. Financing for the acquisition was secured through ICG Real Estate.
Situated in the Foxboro Business Park near London, the Redhill Data Centre campus encompasses 11,800 square metres across three buildings with 26MVA of power capacity. The site hosts 26 tenants, including Fortune 500 companies and organisations from sectors such as financial services and AI. The facility’s appeal lies in its secured green energy, low-latency connections to hubs like Slough and Docklands, and scalable infrastructure.
In its January 2024 Research Letter, Castleforge highlighted the growing imbalance between surging data demand and the constrained power supply. The challenges of constructing new data centres in metropolitan areas make established hubs like Redhill increasingly attractive for investment opportunities.
Adam MacLeod, Partner at Castleforge, highlights the strategic importance of this acquisition:
“Data centres have been an attractive prospect that we have been monitoring for some time, but with advancements in AI and cloud computing accelerating demand, we have been eager to find the right opportunity in which to invest. The sector also fits within our speciality of operational real estate investment, and we see this as a logical extension to our existing capabilities.”
“Redhill presents a rare opportunity to acquire a high-performing data centre in the prime London market, with strategic potential for expansion in both power and scale,” said Paul Leong, Chief Financial Officer at Galaxy Data Centers. “We see tremendous growth potential to expand the facility’s power capacity and grow Redhill’s customer relationships. We are dedicated to enhancing the service and experience for all Redhill’s customers throughout this transition and beyond.”
Galaxy specialises in data and energy infrastructure, with broad data centre experience in North America, and is looking to bring best practices as it expands to Europe and Asia Pacific.
Castleforge and Galaxy intend to significantly expand the capacity of the data centre to meet increasing demand for digital infrastructure driven by advancements in AI and hybrid cloud computing.
“Redhill, with its robust 26MVA capacity, is fully equipped to meet customers’ immediate needs,” states Dave Misra, Managing Partner of Galaxy Data Centers. “Looking ahead, we are exploring a 10-15MW build-to-suit expansion to ensure we can deliver the scale, density, and power to meet edge, hyperscale and enterprise customer needs of tomorrow in this rapidly evolving digital landscape.”
As data centre demand across EMEA continues to skyrocket, London is the largest and most dominant data centre market in Europe and the second largest globally after Northern Virginia. According to the latest data from CBRE, the European data centre market grew by nearly 20% year-on-year in Q1 2024, with significant development across Frankfurt, London, Amsterdam and Paris.
“Redhill Data Centre’s proximity to London means it offers an important hub for digital services that require fast connections to the capital. With no sign of digital innovation slowing down, we felt this was the right time to make a financial commitment to the market and believe there will be significant further opportunities to come,” said Adam MacLeod, Partner at Castleforge.
With the acquisition of an already operational data centre in one of the world’s most significant markets, Castleforge anticipates a significant ROI, with substantial opportunities for expansion to meet surging demand for digital infrastructure in the coming years.
Castleforge will acquire the site from a global data centre operator in a deal brokered by CBRE. Global alternative asset manager ICG was the lender via its Real Estate Debt Strategy. Since it was founded in 2010, Castleforge has invested approximately £1 billion of asset value throughout the UK and Europe.