Keppel DC REIT, a Singapore-based real estate investment trust, has expanded its geographical presence in Europe with the acquisition of the shell and core building of a data center in Milan, Italy. The purchase consideration of the data center is EUR 37.3 million.
The data center comprises three interconnected four-story buildings with a total rentable area of approximately 15,365 square meters (165,389 square feet). The facility is sited on 11,965 square meters (128,791 square feet) of freehold land that is approximately eight kilometers away from the Milan city center, well connected and easily accessible via the Milan Metro system.
The data center has been fully leased to one of the world’s largest telecommunications companies, on a double-net lease structure for 12 years since January 2016. The lease provides for annual rental escalations and an option to renew for another six years. The client will continue to manage the facility, own the fit-out, as well as bear operating expenses and capital expenditure of the mechanical and electrical equipment.
Commenting on the REIT’s first investment in Italy, Mr Chua Hsien Yang, CEO of Keppel DC REIT Management Pte. Ltd., the Manager of Keppel DC REIT, said, “Milan is home to the Milan Internet Exchange point and is a strategic location as an emerging regional IT hub that is well connected to other European markets,” said Mr Chua Hsien Yang, CEO of Keppel DC REIT Management Pte. Ltd., the Manager of Keppel DC REIT. “This acquisition complements REIT’s existing portfolio profile and growth plans by increasing the proportion of European assets and master-leased facilities. The addition of the shell and core asset on a double-net basis will require minimal capital expenditure, and also adds a well-established client to the REIT’s client base.”
According to BroadGroup, the Italian market presents opportunities with data center demand growth forecasted to outpace supply growth. Utilization rate is expected to rise steadily, with data center demand projected to grow at a compounded annual growth rate of 15% from 2016 to 2020. In addition, increasing IT outsourcing, cloud adoption and data sovereignty regulations in Europe are expected to continue driving the region’s data center requirements.
Keppel DC REIT’s data center assets under management will now increase to approximately S$1.13 billion with aggregate rentable area of approximately 70,912 square meters (763,298 square feet) across 10 data centers.