Principal Closes $3.6B Data Center Fund

March 3, 2025

The firm partnered with Stream Data Centers.

Rendering of San Antonio III, Stream Data Centers' newest campus in San Antonio. — Stream Data Centers plans to bring online the first building at its new campus in San Antonio in the second quarter. *Image courtesy of Stream Data Centers*

Principal Financial Group has closed a $3.6 billion fund dedicated to hyperscale data center developments across the U.S. The firm’s investment management unit, Principal Asset Management, controls the oversubscribed fund.

The vehicle is projected to capitalize more than $8 billion in assets. Principal’s development partner is Stream Data Centers.

Last June, Stream broke ground on a $400 million, five-building AI-ready data center campus in San Antonio. The first building is expected to be ready for occupancy in the second quarter of this year.

Principal Asset Management’s dedicated real estate investment arm is Principal Real Estate, which has been an active player in the data center sector since 2007. It has $11 billion in active developments and assets under management.

Principal’s new fund comes as a response to increasing demand for additional digital infrastructure. Alongside with new records in construction activity in the sector, the data center market will struggle with tighter vacancy rates and higher competition for land and resources, according to a recent CBRE outlook.

Investor interest in data centers to continue growing

Last week, American Real Estate Partners closed its fourth real estate GP fund with $309 million in equity commitments. Dubbed AREP Strategic Opportunity Fund IV, it is the company’s largest investment vehicle and will be focused on data centers and residential. AREP plans to allocate 80 percent of these funds for the expansion of its data center platform, PowerHouse.

A recent DLA Piper real estate report shows that investor interest in industrial assets declined in 2024, in favor of data centers. With more than 950 purchase and sale transactions and more than 500 property management agreements analyzed, the company noted that in 2020 and 2021, none of its clients were acquiring data centers. By 2023 data center deals reached a 4 percent share, while at the end of last year, the figure jumped to 9 percent—the steepest increase out of any real estate sector.