PR88544

SINGAPORE, Mar. 17, 2021 /PRNewswire=KYODO JBN/--

Ascendas Funds Management (S) Limited (the "Manager"), in its capacity as the

manager of Ascendas Real Estate Investment Trust ("Ascendas Reit"), is pleased

to announce the Proposed Acquisition of a portfolio of data centres located

across Europe (the "Proposed Acquisition")[1], for S$904.6 million[2] ("Total

Consideration") from subsidiaries of Digital Realty Trust, Inc. ("Vendor"). The

portfolio comprises 11 data centres (the "Target Portfolio" or "Target

Properties") located across the United Kingdom ("UK") (4 properties), the

Netherlands (3 properties), France (3 properties) and Switzerland (1 property).

Mr William Tay, Executive Director and Chief Executive Officer of the Manager

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$1.5 billion 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."

Key Merits of the Proposed Acquisition

1.    Enlarges Ascendas Reit's exposure to the resilient data centre asset class

Demand for data centres is expected to grow due to increasing reliance on data

and online applications as well as accelerating digitisation across industries.

Some of the key trends that continue to underpin demand for data centres

include the increasing adoption of cloud computing, the growing number of

internet users and mobile devices, larger data storage requirements and

fast-growing technology trends such as big data analytics, Internet of Things

(IoT), Industry 4.0, 5G network, e-commerce, video streaming services etc.

Additionally, data sovereignty laws are expected to benefit the European data

centres as companies choose to store data within Europe to serve the large

local markets.

The Target Portfolio will increase Ascendas Reit's investment in data centres

to 10% (S$1.5 billion) of total investment properties of S$15.0 billion (from

4% or S$0.5 billion as at 31 December 2020).

2.    93% of the Target Portfolio (by asset value) is located in key European

data centre markets

The Target Portfolio comprises 11 data centres, of which nine (93% of Target

Portfolio by asset value) are strategically located in London, Amsterdam and

Paris, which are top data centre markets in Europe.

London, Amsterdam and Paris are ranked the first, third and fourth largest

colocation markets in Europe respectively, with a combined colocation market

size of approximately 1,383 megawatts ("MW") as at 31 December 2020.[3]

They benefit from being close to large population centres and have the

connectivity and infrastructure to attract the data centre providers.

3.    European data centre markets are recording strong capacity growth driven

by robust take-up levels

According to CBRE, take-up of colocation data centres outstripped new supply in

2020 across the FLAP markets[4] as more companies embark on their digital

transformation plans.  Companies are increasing their consumption of cloud

services, in turn driving colocation demand from cloud providers. Colocation is

also increasingly being used to satisfy companies' IT requirements which are

growing in scale and complexity.

During 2020, a total of 201 MW was taken up in FLAP markets (Frankfurt 67 MW,

London 86 MW, Amsterdam 32 MW and Paris 17 MW) on the back of new supply of 174

MW (Frankfurt 62 MW, London 26 MW, Amsterdam 57 MW and Paris 29 MW).  

As a result, FLAP markets' vacancy rate improved to 19% (from 21% in 2019). In

2021, vacancy rate is expected to fall further to 17% driven by strong demand.

Market absorption, which is the number of years it would take current vacant

supply to be fully let[5] was 2.4 years as at 31 December 2020 (down from 3.0

years in 2019) and is expected to decline to 2.3 years in 2021.[3]

4.    Improves diversity of Ascendas Reit's portfolio and offers more freehold

land

With the Proposed Acquisition, Ascendas Reit's portfolio will be geographically

diversified, with 60% of investment properties in Singapore, 14% in the United

States ("US"), 14% in Australia and 12% in the UK/Europe.  

Approximately 67% of the Target Portfolio (by asset value) is located on

freehold land whilst the remaining 33%[6] is on leasehold land with a weighted

average land lease to expiry of 42.9 years[7]. Ascendas Reit's portfolio will

further strengthen from the increase in proportion of freehold land (by asset

value) from 35.4% to 37.5%[8] assuming completion of the acquisition of the

Target Portfolio.

5.    Stable and sustainable income stream with long weighted average lease to

expiry ("WALE") and triple net lease structures

The Target Portfolio has a long WALE of 4.6 years by rental income. About 83%

of the leases (by rental income) have embedded annual rent escalations of

between 1.0% to 3.0%, providing organic growth.[9]

As at 31 December 2020, 58% of the Target Portfolio by rental income is leased

on a triple net basis where all property outgoings such as maintenance, tax and

insurance are borne by the tenants. The remaining 42% comprises leases within

colocation data centres where Ascendas Reit will own the M&E and is responsible

for property outgoings.

6.    Strengthens overall customer base with high-quality companies

The Target Portfolio is 97.9%[9] occupied by 14 high-quality and established

customers. These customers operate in a range of industries such as financial

services, telecommunications, information technology, retail (supermarkets) and

education, and are leasing the properties for their data centre requirements.

7.    Distribution per Unit ("DPU") accretive acquisition

Net property income ("NPI") yield[10] for the first year is approximately 6.0%

and 5.7% pre-transaction costs and post-transaction costs respectively. The pro

forma impact on the DPU for the financial year commencing on 1 January 2020 and

ended 31 December 2020 is expected to be an improvement of 0.189 Singapore

cents assuming the Proposed Acquisition was completed on 1 January 2020.[11]

Details of the Acquisition

Ascendas Reit, through its wholly owned subsidiaries, has today entered into a

sale and purchase agreement with the Vendor and is expected to complete the

Proposed Acquisition today in UK time.  

The total consideration of S$904.6 million is in line with the independent

market valuations of the Target Properties, which amount to S$905.0

million[12].  

Ascendas Reit is expected to incur an estimated transaction cost of S$55.4

million, which includes stamp duty, professional advisory fees, and acquisition

fees payable to the Manager in cash (being 1% of the Total Consideration of

S$904.6 million, which amounts to approximately S$9.0 million).

The total acquisition cost of S$960.0 million, will be financed with proceeds

from the Equity Fund Raising[13] announced on 10 November 2020, debt financing

and/or internal cash resources.

About the Target Portfolio

The 11 data centres have a total net lettable area of 61,637 sqm. Six data

centres are located on freehold land whilst the remaining five data centres[14]

are sited on leasehold land with a weighted average land lease to expiry of

42.9 years.  

Including the Target Portfolio, Ascendas Reit will own 212 properties worth

S$15.0 billion comprising 96 properties (S$9.0 billion) in Singapore, 37

properties (S$2.1 billion) in Australia[15], 49 properties (S$1.7 billion) in

the UK/Europe and 30 properties in the US (S$2.1 billion).

For more details about the Proposed Acquisition and the individual data

centres, please refer to the accompanying (1) announcement, and (ii) investor

presentation, both titled "Proposed acquisition of a portfolio of 11 data

centres in Europe" dated 17 March 2021.

Target Portfolio Statistics

--Location & Number of Properties:

11 data centres

London, UK: 3 properties

Amsterdam, Netherlands: 3 properties

Paris, France: 3 properties

Manchester, UK: 1 property

Geneva, Switzerland: 1 property

--Land Area:

136,816 sqm

--Land Tenure (by asset value):

Freehold: 6 properties

Leasehold: 5 properties[16] with weighted average land lease to expiry of 42.9

years

--Total Net Lettable Area:

61,637 sqm

--WALE (by gross revenue):

4.6 years

--Occupancy Rate:

97.9%

--Total Number of Customers:

14

--Lease Structures (by rental income):

58% triple-net  

42% colocation

[1]    The Proposed Acquisition will be made through the acquisition of the

entire issued share capital of certain corporations which own the Target

Properties. Total Consideration is subject to a completion working capital

adjustment, as set out in the Sale and Purchase Agreement. Please refer to the

announcement titled "Proposed Acquisition of a Portfolio of 11 Data Centres in

Europe" and dated 17 March 2021 for more details.

[2]    Comprising approximately GBP250.25 million for the target properties

located in the UK and approximately EUR276.85 million for the other target

properties located in the Netherlands, France and Switzerland. Illustrative

exchange rates of GBP1.0000: S$1.8395 and EUR1.0000: S$1.6047 are used for all

conversions from Pound Sterling and Euro amounts into Singapore Dollar amounts

respectively in this press release.

[3]    Source: CBRE Research, Q4 2020. Data refers to the carrier-neutral

colocation market in each city.

[4]    "FLAP" refers to the four largest colocation markets in Europe:

Frankfurt, London, Amsterdam and Paris.

[5]     Based on the fixed average take-up of the previous five years.

[6]     Includes two properties on perpetual leasehold basis.

[7]     As at 31 December 2020.

[8]     Pro forma as at 31 December 2020.

[9]     As at 31 December 2020.

[10]   The NPI yield is derived using the estimated NPI expected in the first

year of acquisition.

[11]   The annualised pro forma DPU impact is calculated based on the following

assumptions a) Ascendas Reit had completed the Proposed Acquisition on 1 Jan

2020, held and operated the Target Properties through 31 Dec 2020, b) the

Proposed Acquisition is funded by equity of approximately S$612.5 million

(approximately 63.8% of Total Acquisition Cost) and additional borrowings of

S$347.5 million (36.2%) and, c) the Manager elects to receive its base fee 80%

in cash and 20% in units.

[12]   The valuations were commissioned by the Manager and HSBC Institutional

Trust Services (Singapore) Limited (trustee of Ascendas Reit) and carried out

by Newmark Knight Frank Valuation & Advisory, LLC, using the sales comparison

and income capitalisation approaches. The independent valuations concluded an

aggregate market value of GBP250,250,000 for the UK Properties and

EUR277,100,000 for the other Target Properties. Please refer to the

announcement titled "Proposed Acquisition of a Portfolio of 11 Data Centres in

Europe" dated 17 March 2021 for the dates of valuation.

[13]   Please refer to "Launch of Equity Fund Raising to Raise Gross Proceeds

of Approximately S$1,200 million" announcement dated 10 November 2020.

[14]   Includes two properties on perpetual leasehold basis.

[15]    Includes 1-5 Thomas Holt Drive in Sydney, Australia, acquired on 13

January 2021.

[16]    Includes two properties on perpetual leasehold basis.

About Ascendas Real Estate Investment Trust (www.ascendas-reit.com)

Ascendas Real Estate Investment Trust (Ascendas Reit) is Singapore's first and

largest listed business space and industrial real estate investment trust. It

was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in

November 2002.

As at 31 December 2020, Ascendas Reit's investment properties under management

stood at S$13.7 billion. The portfolio comprises 200 properties across the

developed markets of Singapore, Australia, the United Kingdom and the United

States. Ascendas Reit's portfolio includes business and science parks, suburban

office properties, high-specifications industrial properties, light industrial

properties, logistics and distribution centres, and integrated developments,

amenities and retail properties.

These properties house a tenant base of more than 1,450 international and local

companies from a wide range of industries and activities, including research

and development, life sciences, information technology, engineering, light

manufacturing, logistics service providers, electronics, telecommunications,

manufacturing services and back-room office support in service industries.

Major tenants include Singtel, Stripe, DSO National Laboratories, Pinterest,

DBS, CareFusion, Wesfarmers, Citibank and JPMorgan.

Ascendas Reit is listed in several indices. These include the FTSE Straits

Times Index, the Morgan Stanley Capital International, Inc (MSCI) Index, the

European Public Real Estate Association/National Association of Real Estate

Investment Trusts (EPRA/NAREIT) Global Real Estate Index and Global Property

Research (GPR) Asia 250. Ascendas Reit has an issuer rating of 'A3' by Moody's

Investors Service.

Ascendas Reit is managed by Ascendas Funds Management (S) Limited, a wholly

owned subsidiary of Singapore-listed CapitaLand Limited, one of Asia's largest

diversified real estate groups.

About CapitaLand Limited (www.capitaland.com)

CapitaLand Limited (CapitaLand) is one of Asia's largest diversified real

estate groups. Headquartered and listed in Singapore, it owns and manages a

global portfolio worth about S$132.5 billion as at 31 December 2020.

CapitaLand's portfolio spans across diversified real estate classes which

includes commercial, retail; business park, industrial and logistics;

integrated development, urban development; as well as lodging and residential.

With a presence across more than 230 cities in over 30 countries, the Group

focuses on Singapore and China as its core markets, while it continues to

expand in markets such as India, Vietnam, Australia, Europe and the USA.

CapitaLand has one of the largest real estate investment management businesses

globally. It manages six listed real estate investment trusts (REITs) and

business trusts as well as over 20 private funds. CapitaLand launched

Singapore's first REIT in 2002 and today, its stable of REITs and business

trusts comprises CapitaLand Integrated Commercial Trust, Ascendas Real Estate

Investment Trust, Ascott Residence Trust, CapitaLand China Trust, Ascendas

India Trust and CapitaLand Malaysia Mall Trust.

CapitaLand places sustainability at the core of what it does. As a responsible

real estate company, CapitaLand contributes to the environmental and social

well-being of the communities where it operates, as it delivers long-term

economic value to its stakeholders.

Important Notice

This press release may contain forward-looking statements. You are cautioned

not to place undue reliance on these forward-looking statements, which are

based on the current view of management regarding future events. Neither

Ascendas Funds Management (S) Ltd nor any of its affiliates, advisers or

representatives shall have any liability whatsoever (in negligence or

otherwise) for any loss howsoever arising, whether directly or indirectly, from

any use of, reliance on or distribution of this press release or its contents

or otherwise arising in connection with this press release. The past

performance of Ascendas Reit is not indicative of future performance. The

listing of the units in the Ascendas Reit ("Units") on the Singapore Exchange

Securities Trading Limited (SGX-ST) does not guarantee a liquid market for the

Units. This press release is for information only and does not constitute an

invitation or offer to acquire, purchase or subscribe for the Units. For the

complete disclaimer, please click here:(

https://drive.google.com/file/d/18JXb54lb4A3cXtHMwoPtMJmX7CT9peVN/view).

SOURCE: Ascendas Reit

Image Attachments Links:

   Link: http://asianetnews.net/view-attachment?attach-id=386759

   Caption: Located in London, the largest and most mature colocation data centre market in

Europe, the two-storey Croydon (pictured) is one of the 11 European data

centres that Ascendas Reit is acquiring. The DPU accretive acquisition marks

the Reit’s maiden investment in European data centres.