Digital Realty Trust Pockets $674M for Data Center Portfolio
- Mar 18, 2021
Ascendas REIT will be acquiring, from subsidiaries of Digital Realty Trust Inc., a portfolio of 11 European data centers for S$904.6 million ($674 million), the Singaporean company’s manager, Ascendas Funds Management (S) Ltd., announced Wednesday. The deal was expected to close the same day, U.K. time.
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The portfolio consists of four data centers in the U.K. (three in London, one in Manchester), three in Amsterdam, three in Paris and one in Geneva, Switzerland.
The 11 data centers have a total net leasable area of 61,637 square meters (663,455 square feet). Six data centers are sited on freehold land, and the other five are on leasehold land with a weighted average remaining lease term of 42.9 years.
The overall occupancy is 97.9 percent. More than half of the portfolio is leased on a triple-net basis.
In a prepared statement, Ascendas Funds Management Executive Director and CEO William Tay said that the acquisition gives the REIT a unique opportunity to own a portfolio of well-occupied data centers located across key markets in Europe and that the transaction complements its existing data center portfolio in Singapore, increasing the sector’s contribution to S$1.5 billion [$1.1 billion] or 10 percent of investment properties under management.
Ascendas REIT’s total acquisition cost of S$960.0 million ($716 million), which includes stamp duty, professional advisory fees and 1 percent acquisition fees payable to Ascendas Funds Management, reportedly will be financed with proceeds from an equity fund raising announced last November, along with debt financing and/or internal cash resources.
The REIT’s announcement noted that, based on figures from CBRE, data center absorption in the “FLAP” markets (Europe’s largest colocation markets: Frankfurt, London, Amsterdam and Paris) outpaced new supply in 2020. As a consequence, average vacancy in those top markets fell from 21 percent in 2019 to 19 percent, with a further decrease to 17 percent expected this year.
Nothing but big deals
Ascendas arrived in the U.S. with a bang in November 2019, when it acquired 28 business park properties totaling nearly 3.4 million square feet, mostly in Portland, Ore., and San Diego, in a deal worth about $1.2 billion.
In one of 2020’s biggest office deals in California, valued at $363.7 million, Ascendas acquired 510 Townsend St. in San Francisco, its first property there. The 294,580-square-foot building was sold by Alexandria Real Estate Equities, which plans to focus on life sciences assets.