US-based Digital Realty has filed a preliminary prospectus for the $235 million IPO of a Singapore-listed REIT with a seed portfolio of 10 North American data centre assets.
The world’s biggest data centre trust is sponsoring Digital Core REIT, which will offer 267,034,000 units to the public at an issue price of $0.88 each, according to the document lodged with the Monetary Authority of Singapore on Monday.
Through a Singapore-based holding firm, Digital Realty has agreed to subscribe for 428,806,000 units at the IPO price, with the New York-listed sponsor receiving cornerstone support for its Asian listing from AEW Asia, AIA Investment Management, Blackrock, DBS Bank and JP Morgan Asset Management, among others.
“Digital Core REIT seeks to create long-term, sustainable value for all stakeholders through ownership and operation of a stabilised and diversified portfolio of mission-critical data centre facilities concentrated in select global markets,” the trust’s manager said.
Key Server Market
Digital Core REIT’s initial portfolio comprises 10 freehold data centres in key markets of the US and Canada with an appraised valuation of $1.4 billion and a net rentable area of 1.2 million square feet (111,484 square metres). The facilities are fully leased to a roster of blue-chip customers, each with numerous deployments across Digital Realty’s global platform.
The weighted average remaining lease term is more than six years, and all lease agreements feature annual cash rental rate escalations ranging from 1 to 3 percent. Some 85 percent of the portfolio is leased on a triple-net basis, with property expenses shouldered by the tenants.
The seed assets include four data centres in Silicon Valley, two in Los Angeles, three in northern Virginia and one in Toronto. The largest chunk of the portfolio is in the server-hosting hotbed of northern Virginia, near Washington DC, with an appraised value of $629 million and 494,000 square feet, and in Silicon Valley, with those assets valued at $479 million and spanning 414,000 square feet.
Digital Realty plans to co-invest with Digital Core REIT for all future acquisitions, with the REIT holding 90 percent of each asset and the sponsor taking 10 percent. In the event that Digital Realty chooses not to co-invest, Digital Core REIT may acquire 100 percent of an asset or invest alongside a third party.
Texas-based Digital Realty’s portfolio contains more than 280 data centres in 26 countries. In Asia Pacific, the trust’s facilities include five in Japan, three in Singapore, three in Australia, two in Hong Kong and one in South Korea.
In July, the trust announced an expansion of its APAC footprint with the acquisition of a land parcel to develop its second project in South Korea. Digital Realty paid $66 million for the 5 acre (2 hectare) plot in northwest Seoul’s Gimpo City to accommodate up to 64 megawatts of critical IT capacity.
Digital Realty revealed the Korean investment less than two weeks after announcing a deal with Canadian asset management giant Brookfield to set up a joint venture to develop, own and operate data centres in India.
Just last week the digital infrastructure giant opened its second data centre in Hong Kong after commencing service at data centres in Tokyo and Osaka during August and September through a joint venture with Mitsubishi.