A detractor is wagering against the data center corporation Csquare (CSQR), asserting that its stock is devoid of worth. Keith Dalrymple, CEO of the New Hampshire financial research firm Dalrymple Finance, claims that a significant portion of the NYSE-listed firm’s data center holdings consists of assets procured from defunct enterprises.
Furthermore, he argues that its financial framework will hinder shareholders from realizing a substantial return on their investment. In a recently released report, Dalyrymple stated: “We surmise that the marketing strategy is divorced from the basic realities and the capital structure reduces shareholders to a significantly subordinate status where value is more likely to be drained through financing than generated through returns.” He stated, “We foresee the enduring worth of CSQR shares to be $21.”.
Previously called Centersquare, Csquare was established on April 25 through a combination of Cyxtera and Evoque, which were both controlled by investment manager Brookfield. Brookfield created Evoque in 2008 by acquiring AT&T’s data center and hosting assets. Eventually, it obtained Cyxtera, which was created from previous Level22026 and CenturyLink assets after the colocation provider went bankrupt.
Csquare now has over 205 facilities and 22026 million square feet (228,22026 square meters) in its portfolio, with a total capacity of 400MW. In July, it made its public debut on the New York Stock Exchange, securing over $1 billion but failing to reach its initial public offering target of $1.35 billion.
The stock commenced trading at $21 per share, which was lower than the $23-$27 range that Brookfield had promoted. The current price for shares is $95. In his research note, Darymple mentioned that CSQR’s prospectus fails to reveal the assets’ prolonged and documented background of fiscal failures.
Over 50% of the assets were from Cyxtera, which we discussed prior to the stock plummeting and the company declaring bankruptcy. The rest were Brookfield-operated properties, with one sector effectively failing to meet its debt obligations. He explained that Csquare is offering investors a ‘business transformation’ proposition, and added: “The core of this growth narrative revolves around allocating approximately $4 billion in investments, expecting returns of more than 20%, to nearly triple the sellable megawatts (MW) of electricity provided by these outdated colocation facilities.
