H5 Data Centers has successfully acquired multiple data center properties from Yahoo! in a significant sale-leaseback transaction. This acquisition includes key facilities located outside Buffalo, New York, alongside sites in Nebraska and Washington, significantly expanding H5’s data center portfolio.
Key Acquisitions: Lockport Data Centers
In late December 2024, H5 finalized the purchase of two Yahoo!-owned data center properties in Lockport, New York, for $49 million. The acquisition involves two expansive sites at 5319 Enterprise Drive, spanning 43 acres and providing 409,200 square feet (38,016 square meters) of data center space. The facilities are equipped with substantial power capacity, supported by two on-site substations capable of delivering up to 44 MW.
Yahoo! first developed these data centers in 2009, building a state-of-the-art, passively air-cooled facility with a unique “chicken-coop” design. Over the years, the campus expanded to accommodate growing demands for data storage and processing power. Despite the acquisition, Yahoo! will continue its operations at the Lockport site under a long-term lease arrangement.
Yahoo!’s Long-Term Lease with H5
As part of the sale-leaseback deal, Yahoo! will retain operational control of its data center functions at the Lockport facility. Approximately 140 Yahoo! employees will remain on-site for at least the next five years, ensuring continuity in Yahoo!’s services. In contrast, 15 Yahoo! staff have transitioned to H5 as part of the deal, marking a shift in management and operational responsibilities.
H5’s decision to forgo tax breaks and incentives that had previously been granted to Yahoo! underscores the company’s commitment to the transaction’s long-term success, both for itself and the Lockport community.
Expanding Across the U.S.: Additional Acquisitions in Washington and Nebraska
In addition to the Lockport facilities, H5 has also acquired two other major data center sites from Yahoo! in Quincy, Washington, and Omaha, Nebraska. These acquisitions add nearly half a million square feet of data center space to H5’s growing portfolio.
Quincy, Washington
The two data centers in Quincy, Washington, located at 1500 M Street NE, offer 452,300 square feet (42,020 square meters) of space across multiple buildings. Positioned on a 63-acre campus, the Quincy facilities provide an impressive 82 MW of power through their two on-site substations. Quincy has been a key location for Yahoo! since 2007, with the company expanding its operations in the region over the years.
Omaha, Nebraska
H5 has also acquired a Yahoo! facility in Omaha, Nebraska, located at 10917 Harry Watanabe Parkway in La Vista. This site, spanning 234,500 square feet (21,785 square meters), operates from a single building and offers 17.3 MW of power. Unlike the other properties, the Omaha facility features a flat-roof design and was originally converted into a data center by Yahoo! around 2010, with further expansions in 2015.
H5’s Growing Portfolio and Strategic Goals
H5’s recent acquisitions significantly bolster its presence in the U.S. data center market. With more than 4 million square feet (371,610 square meters) of data center space across 20 major U.S. markets, H5 continues to expand its reach and capacity. The company is also actively pursuing joint ventures, including one with Canadian investment firm Novacap, which recently closed its first data center fund. This joint venture could have played a role in the acquisition of Yahoo!’s properties through its affiliate, Hyscale Data Centers.
What the Acquisition Means for the Data Center Industry
H5’s acquisition of Yahoo!’s data centers aligns with broader industry trends focused on the increasing demand for data storage and cloud computing services. By securing strategically located facilities with robust power infrastructure, H5 is positioning itself to meet the growing needs of businesses and technology companies that rely on high-performance computing and data storage solutions.
FAQ
1. Why did H5 acquire Yahoo!’s data centers?
H5 acquired these data centers to expand its portfolio and increase its market share in the U.S. data center industry. The sites offer significant space and power capacity, making them key assets for H5’s strategic growth.
2. What is a sale-leaseback deal?
In a sale-leaseback deal, a company sells an asset, such as a property or facility, to another party but continues to lease and operate it. This allows the seller to retain use of the property while receiving capital from the sale.
3. What is the “chicken-coop” design in data centers?
The “chicken-coop” design refers to a passive cooling system used in data centers, which typically involves open, well-ventilated structures that rely on natural airflow to regulate temperature.
4. How will Yahoo!’s operations be affected by the sale?
While H5 has acquired the data centers, Yahoo! will continue to operate its services at the Lockport and other sites under long-term lease agreements, ensuring minimal disruption to its business.
5. How does H5’s acquisition impact the data center market?
H5’s acquisition strengthens its position in the competitive data center market, meeting the growing demand for cloud services and high-performance computing solutions.
