Singapore-listed industrial real estate investment trust Ascendas Real Estate Investment Trust (Ascendas Reit) is acquiring a portfolio of data centres located across Europe from subsidiaries of Digital Realty Trust, Inc. for S$904.6 million.
The portfolio comprises four data centres(£250.25m) in the UK and seven data centres(€276.85m) in the Netherlands, France, Switzerland.
“This acquisition gives us a unique opportunity to own a portfolio of well-occupied data centres located across key markets in Europe. It complements our existing data centre portfolio in Singapore and will increase the sector’s contribution to S$1.5 billion or 10% of investment properties under management. We see good potential in the data centre business and will continue to source and make further acquisitions when the opportunities arise,” said William Tay, Executive Director and Chief Executive Officer of the Manager.
The portfolio is 97.9%9 occupied by 14 high-quality and established customers. These customers operate in a range of industries such as financial services, telecommunications, information technology, retail (supermarkets) and education, and are leasing the properties for their data centre requirements.
The portfolio comprises 11 data centres are strategically located in London, Amsterdam and Paris which are top data centre markets in Europe.
London, Amsterdam and Paris are ranked the first, third and fourth largest colocation markets in Europe respectively, with a combined colocation market size of approximately 1,383 megawatts as at 31 December 2020.
They benefit from being close to large population centres and have the connectivity and infrastructure to attract the data centre providers.
The portfolio has a long WALE of 4.6 years by rental income. About 83% of the leases (by rental income) have embedded annual rent escalations of between 1.0% to 3.0%, providing organic growth.
Ascendas Reit said net property income yield for the first year is approximately 6.0% and 5.7% pre-transaction costs and post transaction costs respectively.
The total acquisition cost of S$960.0 million will be financed with proceeds from the REIT’s S$1.2 billion the equity fund raising announced on 10 November 2020, debt financing and/or internal cash resources.