S-Reits increase exposure to data centre assets

ACCORDING to the latest 2023 Global Data Centre Market Comparison report by Cushman & Wakefield, post-pandemic activity in the data centre space continued from 2021 through to 2022, despite headwinds in the overall economy.

There was a substantial move towards emerging markets, with hyperscale tenants and colocation providers evaluating and announcing new projects worldwide.

Recently, CapitaLand Investment : 9CI 0% (CLI) also announced the establishment of a China data centre development fund, which has committed to invest in two hyperscale data centre development projects in Greater Beijing.

Upon completion of these projects, it will add approximately S$1 billion to CLI’s funds under management.

Currently, CapitaLand has a portfolio of 26 data centres in Asia and Europe with total assets under management (AUM) of S$6 billion on completed basis.

Among its five listed S-Reits & property trusts, two have exposure to the data centre space.

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CapitaLand Ascendas Reit : A17U 0% (CLAR)’s portfolio today consists of 17 data centre properties across Singapore and Europe, making up 8 per cent of its AUM.

This compares with three data centres which made up 4 per cent of its AUM back in 2020.

In its latest FY2022 results, CLAR noted that 8.9 per cent of its new international tenant demand by gross rental income came from IT and data centre sectors.

CapitaLand India Trust : CY6U 0% (CLINT) announced in the fourth quarter ended Dec 31, 2022, that it has plans to develop two more data centres in Hyderabad and Chennai in addition to Mumbai and Bangalore.

This brings CLINT’s data centre exposure to four prime India markets.

Aside from CLAR and CLINT, there are three other S-Reits which have significant exposure to the data centre segment. These are Mapletree Industrial Trust : ME8U 0% as well as Digital Core Reit : DCRU 0% and Keppel DC Reit : AJBU 0%.

The latter two are pure-play data centre Reits.

The data centre segment of Mapletree Industrial Trust’s (MIT) portfolio has increased significantly over the past few years.

Its data centre exposure increased from 41.2 per cent of AUM back in March 2021, to 53.5 per cent as at Dec 31, 2022.

Keppel DC Reit (KDCReit) has a portfolio of 23 data centres as at Dec 31, 2022, with AUM of S$3.7 billion.

The Keppel Group has more than S$2 billion in data centre assets, under development and management, through Keppel Corporation’s : BN4 0% private data centre funds and KDCReit’s sponsor.

When completed and stabilised, and if it makes sense for the Reit and its unitholders, these are assets that KDCReit can potentially acquire.

Digital Core Reit (DCReit), in its first full-year result release since IPO, announced 3.8 per cent higher NPI of US$69.3 million compared to its IPO forecast.

In 2022, DCReit expanded into a new market through the acquisition of a 25 per cent interest in a freehold facility in Frankfurt. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

Source: SGX Research S-Reits & Property Trusts Chartbook.