CapitaLand Ascendas REIT Buys Fifth UK Data Centre in Northwest London for $160M

CapitaLand Ascendas REIT has completed the acquisition of a co-location data centre northwest of London for £125.1 million ($159.6 million), marking the Singapore-listed trust’s fifth server-hosting facility in the United Kingdom.

The purchase consideration took into account an agreed value of £119.4 million for the Watford property, CLAR’s manager said Thursday in a release. The seller was identified only as an unrelated global data centre operator.

The buy boosts CLAR’s data centre investments in the UK by 54 percent to S$569.8 million ($419.7 million), with 96 percent of the trust’s UK assets under management located in London, said William Tay, CEO of the REIT’s manager, which is owned by SGX-listed CapitaLand Investment.

“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 said. “We expect our enlarged data centre portfolio valued at S$1.5 billion to contribute a continuous income stream towards our overall DPU growth.”

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The Watford facility is a two-storey, high-specification data centre with 8,412 square metres (90,546 square feet) of lettable area that is 80 percent occupied by five tenants. The property has a weighted average lease expiry of 3.3 years and a remaining land lease tenure of 85 years.

The data centre’s Tier III status carries an expectation of less than 1.6 hours of downtime annually. No power capacity figures were disclosed for the facility.

CLAR’s manager characterised the northwest of London as a hotspot for data centre builders, providing an attractive option to power-constrained and relatively high-cost central London.

Driven by growing demand, the vacancy rate (by megawatt power) in the UK capital — Europe’s largest co-location data centre market — will continue to decline to 15.9 percent this year from 16.8 percent in 2022, according to CBRE projections.

Fundraising Proceeds Deployed

At the end of June, CLAR’s investment properties under management stood at S$17 billion with a total of 230 assets in Singapore, the US, Europe and Australia. The trust’s UK data centre investments include Reynolds House in Manchester and three London area facilities.

In May the REIT had announced the launch of a private placement to raise S$450 million in capital, including S$129.9 million to partly fund the potential acquisition of an asset “in a key gateway city in Europe”; S$139.5 million to partly fund the acquisition of The Shugart, an R&D and business park property in Singapore; and S$64.4 million to partly finance the proposed redevelopment of a logistics property in the city-state.

CLAR’s manager confirmed Thursday that the Watford acquisition is being financed by a combination of the proceeds from the equity fundraising and debt financing.