Digital Core Reit jumps 15% to close at US$1.01 in SGX mainboard debut

Jude Chan

Published Mon, Dec 6, 2021 · 02:30 PM

DIGITAL Core Reit closed some 14.8 per cent higher than its initial public offering (IPO) price of US$0.88 at US$1.01 on Monday (Dec 6), as it made its trading debut on the mainboard of the Singapore Exchange (SGX).

Trading in units of the pure play data centre real estate investment trust (Reit) commenced after the lunch break at 2pm and opened at US$1, some 13.6 per cent higher than its IPO price.

The counter raced to an intra-day high of US$1.09 – nearly 23.9 per cent above its IPO price – before settling down to close at US$1.01 with a total of 104.8 million units changing hands.

Based on the total of 1.13 billion outstanding units, this gives the Reit a market capitalisation of US$1.14 billion.

Digital Core Reit's IPO of 267 million units, comprising a placement tranche and a public offer, was 19.4 times subscribed, the Reit manager said on Dec 3.

Its offer of 13.4 million units to Singapore retail investors under the IPO was around 16.1 times subscribed, with 10,736 valid applications for 214.8 million units.

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The international placement tranche of 253.7 million units was about 19.6 times subscribed.

In addition, cornerstone investors have each entered into separate subscription agreements at the offering price for a total of nearly 414.8 million units. Among the 26 cornerstone investors are AEW Asia, Affin Hwang Asset Management, AIA Investment Management, AMP Capital Investors, Blackrock, Cohen & Steers Asia, DBS, DWS Investments Australia, FIL Investment Management Hong Kong, Fullerton Fund Management Company, Lion Global Investors, Nikko Asset Management Asia and Value Partners Hong Kong.

Separately, sponsor Digital Realty Trust has agreed to subscribe for over 428.8 million units at the offering price of US$0.88 apiece through a wholly-owned subsidiary. New York Stock Exchange-listed Digital Realty is one of the top 10 largest US-listed Reits and the largest owner and operator of data centre providers in the world.

“We are truly delighted to successfully complete our IPO and listing on the Main Board of the Singapore Exchange. SGX, being Asia's leading destination for REIT listings, has been nothing but supportive throughout our journey and we are glad to have chosen Singapore to list our pure-play data centre Reit,” said John Stewart, chief executive officer of the Reit manager.

“As we commemorate a significant milestone, we look ahead with great anticipation of the opportunities that are before us, both in Singapore and globally,” he added.

Digital Core Reit's initial portfolio comprises 10 freehold data centres in the US and Canada with a total appraised valuation of US$1.4 billion.

The initial portfolio has a total net lettable area (NLA) of 1.2 million square feet, with 4 of the data centres located in the Silicon Valley, another 3 in Northern Virginia, 2 in Los Angeles and 1 in Toronto.

Portfolio occupancy is at 100 per cent, with weighted average lease expiry of the portfolio at 6.2 years based on base rental income for the month of June or 7.7 years by NLA as at end-June.

The Reit will have right of first refusal from its sponsor to a potential pipeline of over US$15 billion of data centres, both existing and under construction.

The Reit manager had forecast a distribution yield of 4.75 per cent for 2022 and projected a distribution yield of 5 per cent for 2023.

The listing of Digital Core Reit brings the total number of SGX-listed Reits and property trusts to 44.

“We are delighted to welcome Digital Core Reit, which is focused on the data centre market that has emerged as one of the bright spots in the Covid-19 pandemic. Our second Reit listing within two weeks is a testament to investor interest for industrial and data centre segments, which will continue to benefit from robust demand driven by digital transformation and emerging technology trends,” said Mohamed Nasser Ismail, head of equity capital markets at SGX.

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