Colony Capital Inc., one of L.A.’s largest real estate investment firms, will pay $185 million for a 20.4% interest in DataBank, a data center provider based in Dallas with assets nationwide.

“This represents a first step for Colony in gaining exposure to the edge data center business that has organic growth and offers incremental acquisition opportunities, as well as brownfield,” incoming Colony Capital Chief Executive Marc Ganzi said on an investor call.

Edge data centers, of which DataBank is a major provider, are smaller data facilities positioned closer to end users to enable faster services.

Colony Capital estimates that the investment will bring 14% total returns to its shareholders.

The DataBank buy-in marks the firm’s first major purchase using the proceeds from the sale of its industrial business to an affiliate of Blackstone Group Inc., which closed on Dec. 10. The divestiture netted Colony approximately $1.2 billion.

Colony’s subsidiary, Digital Bridge Holdings, which the company bought for $325 million earlier this year, has had a controlling interest in DataBank since 2016.

Digital Bridge principals currently own 40% of DataBank. According to Ganzi, these principals will enter into a controlled voting agreement allowing them to retain their interests while giving Colony the ability to appoint a majority of DataBank’s board members.

Colony’s investment in DataBank continues its transformation into a leading provider of digital infrastructure and real estate. Announced in September, the plan — called “Colony Capital 2.0” — is designed to help turn the company’s fortunes.

The downtown-headquartered firm has been in a tough spot since early 2017, when its ill-fated acquisition of NorthStar Asset Management Group and real estate investment trust NorthStar Realty Finance Corp. led to sustained losses and plunging share prices.

Despite its aggressive push to transform into a digital real estate and infrastructure business, Colony retains several of its legacy business lines, including healthcare and lodging. Ganzi said on the call that his company has “no specific exit plan as of yet” for these businesses.

Banking and finance reporter James B. Cutchin can be reached at [email protected] or (323) 556-8332. Follow him on Instagram or Twitter @jamesbcutchin.