Ascendas Reit, Singapore’s largest listed business space and industrial real estate investment trust, has proposed to acquire a portfolio of data centres in Europe for S$904.6 million ($672 million), marking its debut investment in the European data centre space.
In a statement, Ascendas Reit said it will acquire the portfolio of 11 data centres from subsidiaries of Digital Realty Trust Inc, a New York-listed REIT that invests in carrier-neutral data centres.
The portfolio includes four properties in the UK, three in the Netherlands, three in France, and one in Switzerland. The 11 data centres have a total net lettable area of 61,637 sq m. Six data centres are located on freehold land whilst the remaining five data centres are sited on leasehold land with a weighted average land lease to expiry of 42.9 years.
If the deal pushes through, Ascendas will raise its global portfolio to 212 properties worth S$15 billion. Ascendas Reit currently owns 96 properties in Singapore, 37 in Australia, 30 in the US, and 38 in the UK / Europe.
The REIT’s portfolio includes business and science parks, office and industrial properties, logistics and distribution centres, and integrated developments.
“This acquisition gives us a unique opportunity to own a portfolio of well-occupied data centres located across key markets in Europe,” William Tay, executive director and CEO of Ascendas Funds Management, the manager of Ascendas REIT.
The proposed acquisition will enlarge Ascendas REIT’s exposure to the resilient data centre asset class. According to the company, demand for data centres is expected to grow due to increasing reliance on data and online applications as we as accelerating digitisation across industries.
According to CBRE, take-up of colocation data centres outstripped new supply in 2020 across the Frankfurt, London, Amsterdam, and Paris (FLAP) market as more companies embark on their digital transformation plans.
“We see good potential in the data centre business and will continue to source and make further acquisitions when the opportunities arise,” Tay added.
The total acquisition cost of S$960.0 million, will be financed with proceeds from the equity fundraising announced on 10 November 2020, debt financing and/or internal cash resources.