Bruce Duncan comes in as CEO of a major player in the active colocation and data service market
CyrusOne, the data center service company that had been the subject of acquisition rumors earlier this year, is now being led by a new CEO with more than four decades of real estate management and development experience but no background in data centers.
The Lowdown: Bruce Duncan, who has been CEO and director of a range of companies like Cadillac Fairview and Starwood Hotels and Resorts Worldwide, recently was announced as president and CEO of Dallas-based CyrusOne.
The Details: Duncan takes over a company that’s the world’s third-largest data center provider in the United States, with hundreds of customers – including 185 of the Fortune 1000 – in its more than 40 facilities on three continents. He takes over for Tesh Durvasula, who had been president of the company’s European business before assuming the interim president and CEO role in February.
Durvasula took the interim post after Gary Wojtaszek resigned after nine years as CEO.
CyrusOne last year began working with Morgan Stanley to evaluate its options, which included selling the company. In the months that followed, there was speculation that a number of companies – including rival Digital Realty – were interested in buying CyrusOne. Nothing came of the rumors, however, and CyrusOne officials reportedly have said they’re not actively pursuing an acquisition, although Duncan’s hiring may spark speculation again.
In its latest financial quarter, CyrusOne saw revenue grow year-over-year from $225 million to $245.9 million, though net income dropped from $89.4 million to $14.7 million. Part of the company’s strategy has been to target Fortune 1000 companies, and Durvasula said during a conference call in April that almost 80% of the rent that CyrusOne has generated has come from those organizations.
The Impact: The data center service and colocation space is a crowded one, with the likes of Equinix, Digital Realty, and NTT. It has also seen high levels of activity during the COVID-19 pandemic, which has accelerated enterprise migration to the cloud. In turn, hyperscale data center operators like Amazon Web Services (AWS) and Microsoft Azure have turned to colocation companies like CyrusOne to offset some of the demand. Synergy Research Group found that in the first quarter, the overall colocation market grew 7% year-over-year, though revenue from hyperscale operators jumped 22% in the wholesale segment and 9% in retail.
The analysts also said that the onset of the coronavirus outbreak did little to dampen what already was an active data center acquisition market, with the number of M&A deals closing in the first four months exceeding all of 2019’s activity. Digital Realty and Equinix accounted for 35% of the deals, though CyrusOne was on the list of “serial acquirers.”
Background: Duncan also has helped lead Equity Residential and First Industrial Realty Trust, chairs the board of First Industrial, and serves on the boards of Marriott International and Bost Properties.
The Buzz: “Bruce is a proven real estate executive with decades of experience as a REIT [real estate investment trust] CEO and public company director,” said Alex Shumate, chairman of the CyrusOne board. “We are confident that Bruce is the right person to lead the company in our strategic execution, continued growth, and international expansion.”
“I am excited to join CyrusOne, one of the top performing REITs since its inception, to help lead the company’s global expansion and deepen our partnerships with an incredible roster of customers,” Duncan said. “CyrusOne is an industry leader because of an extraordinary team of professionals who are passionate about developing innovative solutions to support the significant demand for data center infrastructure. I look forward to joining the company and being a part of its continued success.”
“It has been my privilege to lead CyrusOne, and I am proud of our accomplishments, especially in the way our team rallied together during these last few eventful months,” Durvasula said. “CyrusOne has a tremendous track record, and I have no doubt that the company will continue to succeed and reach new heights in the years ahead.”