Global cloud- and carrier-neutral data center, colocation and interconnection solutions provider, Digital Realty, has completed the sale of a portfolio of 11 data centers in Europe to Singapore-based Ascendas Reit, a CapitaLand sponsored REIT. Four of these data centers are located in the UK, three in the Netherlands, three in France and one in Switzerland.

The consideration for the four data centers in the UK was £250.25 million while the consideration for the seven data centers on the continent was €276.85 million, for a total of approximately $680 million. The 11 data centers have a total net lettable data center floorspace of 61,623 square meters. Six of these data centers are located on freehold land whilst the remaining five data centers are sited on leasehold land – with a weighted average land lease to expiry of 42.9 years. The acquired data center portfolio is expected to generate 2021 net operating income of approximately $43.5 million.

For Ascendas Reit it is their debut investment in European data centers. Through the acquisition, Ascendas Reit’s investment portfolio will be geographically more diversified. It now includes investment properties in Singapore (14%), the U.S. (14%), and UK/Europe (12%). As of December 2020, Ascendas Reit’s investment properties stood at more than $10.2 billion. Ascendas Reit’s investment portfolio includes business and science parks, industrial properties, suburban office properties, logistics and distribution centers, as well as integrated developments, amenities and retail properties.

Well-Occupied Data Centers

Photo Greg Wright, Chief Investment Officer at Digital Realty
“These 11 legacy assets are almost fully leased, and this portfolio sale enables us to harvest value from stabilized properties and reinvest the proceeds to fund the continued expansion of PlatformDIGITAL in support of our customers’ needs around the world,” said Greg Wright, Chief Investment Officer at Digital Realty.

“This transaction represents an important step towards our goal of self-funding our growth and diversifying our sources of equity capital while shrinking our asset base and setting the stage for accelerating growth as the proceeds are redeployed into accretive investment opportunities,” said Greg Wright, Chief Investment Officer at Digital Realty. “These 11 legacy assets are almost fully leased, and this portfolio sale enables us to harvest value from stabilized properties and reinvest the proceeds to fund the continued expansion of PlatformDIGITAL in support of our customers’ needs around the world.”

Digital Realty expects proceeds from the transaction will initially be used to pay down debt and will ultimately be used to fund future investment activity.

CBRE served as advisor to Digital Realty while White & Case served as Digital Realty’s legal advisor on the transaction.

The 11 acquired data centers are 97.9% occupied by 14 “high-quality and established” customers. These clients operate in a range of industries including telecommunications, financial services, information technology, retail (supermarkets), and education.

“This acquisition gives us a unique opportunity to own a portfolio of well-occupied data centers located across key markets in Europe,” said William Tay, Executive Director and Chief Executive Officer of Ascendas Reit. “It complements our existing data center 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 center business and will continue to source and make further acquisitions when the opportunities arise.”

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