Singapore was Asia’s leading country for outbound property investment volumes in 2020 and the flow of capital originating from the Lion City continued this week with the announcement by Ascendas REIT that they had acquired eleven data centres in Europe.
The data centres are located across Europe, with four in the UK, three in the Netherlands, three in France and one in Switzerland. Ascendas will pay current owners, Digital Realty, S$904.6m ($674.3m) in total for the assets.
Mr William Tay, Executive Director and Chief Executive Officer of Ascendas Funds Management said, “This acquisition gives us a unique opportunity to own a portfolio of well-occupied data centres located across key markets in Europe. It complements our existing data centre portfolio in Singapore and will increase the sector’s contribution to S$1.5bn or 10% of investment properties under management. We see good potential in the data centre business and will continue to source and make further acquisitions when the opportunities arise.”
Data centres have become a much sought-after asset class, with the pandemic accelerating the growth of internet services and online shopping. According to data from CBRE, London, Amsterdam and Paris, are the first, third and fourth largest colocation data centre markets in Europe respectively, with a combined market size of approximately 1,383 megawatts as at 31 December 2020.
The eleven data centres have a total net lettable area of 61,637 sqm. The centres have an occupancy rate of 97.9% with 58% of the space triple-net leased and 42% leased on a colocation basis. Tenants include HSBC Bank, British Telecom, Bouygues Telecom, and leading digital infrastructure company, Equinix.
Ascendas will start to put together a European data centre team to oversee operations, manage customer relationships and grow the portfolio. However, to ensure a smooth transition, Digital Realty is providing one year of property and facilities management services for the eleven data centres post-acquisition.
Ascendas REIT is a managed by Ascendas Funds Management, part of the CapitaLand group, one of Singapore’s leading property companies. Following this latest acquisition, the Trust will own 212 properties valued at S$15bn ($11.1bn) with 96 properties in Singapore, 37 in Australia, 49 in UK/Europe and 30 in the US.