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CapitaLand Ascendas REIT completes acquisition of fifth data centre in the UK for $199.9 mil

Felicia Tan
·2-min read

The acquisition has increased CLAR's data centre investments in the UK by 54% to $569.8 million.

CapitaLand Ascendas REIT (CLAR) A17U has completed the acquisition of its fifth data centre in the UK for GBP119.4 million ($199.9 million). The data centre was acquired from an unrelated global data centre operator.

The data centre is a two-storey, high-specification Tier III colocation data centre facility that is located in Watford in North-West London. It has a total land area of 25,000 sqm (269,097.76 sq ft) with a total lettable area of 8,412 sqm. Its occupancy rate as at June 30, is at 80% and it has a weighted average lease expiry (WALE) of 3.3 years by gross revenue. The data centre has five tenants as at June 30. Its remaining land lease tenure is at 85 years.

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The agreed value of the property is said to be GBP125.1 million.

“As the demand for cloud and digital services continues to rise, we are capitalising on favourable market dynamics to significantly scale up our presence in the data centre sector. London ranks among the top three global data centre markets and is also Europe’s largest colocation data centre market. This acquisition complements our data centres around London, deepening and boosting our data centre investments in the UK by 54% to $569.8 million, as well as increasing our exposure in London to 96% of our investments in the UK,” says William Tay, the REIT manager’s CEO and executive director.

According to CLAR, the acquisition of its latest data centre in the UK significantly expands its data centre footprint in Europe, which further enhances its strategic presence in Europe’s FLAPD markets. FLAPD refers to the five largest data centre markets in Europe, namely, Frankfurt (Germany), London (the UK), Amsterdam (Netherlands), Paris (France) and Dublin (Ireland).

“Given its strategic location and Tier III specifications, along with its robust tenancy, the property will serve as a strong catalyst in delivering additional value to the REIT,” Tay adds.

The enlarged data centre portfolio – now valued at $1.5 billion in terms of assets under management (AUM) – is expected to “contribute a continuous income stream towards [the REIT’s overall distribution per unit (DPU) growth”, he continues. The acquisition is expected to be DPU-accretive. On a pro forma basis for the FY2022 ended Dec 31, 2022, the new data centre is expected to improve DPU by 0.11 cents or 0.7% if the acquisition was completed on Jan 1, 2022.

The acquisition is expected to cost the REIT GBP128.1 million, which will be financed with a combination of the proceeds from its equity fund raising that was announced in May as well as debt financing.

Units in CLAR closed 1 cent lower or 0.37% down at $2.69 in Aug 16.

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