Data Center REIT CyrusOne Focusing on Interconnection

Gary Wojtaszek, president and CEO of CyrusOne, Inc. (NASDAQ: CONE), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

CyrusOne specializes in data center properties. It has more than 925 customers, including nine of the Fortune 20 and more than 165 of the Fortune 1000 or equivalent-sized companies. Wojtaszek said the primary way CyrusOne has been able to increase the diversity of its products and customer base is by “listening to customers very intently to see what’s really challenging them and coming up with solutions.”

Listening to customers enabled CyrusOne to identify the importance of interconnection products, Wojtaszek said. He explained that interconnection refers to the connectivity CyrusOne is putting in place that links all of its data centers together. CyrusOne discovered that its customers were deploying multiple networks and multiple datacenters and decided to act.

“We thought that if we built a superior network we could convince them to ride our network as they link up their facilities together. That’s basically the genesis of that product,” Wojtaszek said.

Interconnection services are growing at a rate of about 30 percent a year, which is about three times faster than the base business, according to Wojtaszek. Interconnection currently represents about 6 percent of revenue, he said. “We expect it’s going to get upwards to 10 percent in a couple of years,” Wojtaszek added.

Meanwhile, although CyrusOne’s primary expansion path is through organic growth, Wojtaszek said the company will consider an acquisition as long as it’s accretive, makes strategic sense and has the right customer base. The most recent addition to the CyrusOne portfolio was the acquisition of Cervalis Holdings LLC, a privately held operator of four data center facilities and two work area recovery facilities. Cervalis mainly serves the financial services industry and gives Cyrus One a foothold in the New York metropolitan area.