The purchase is expected to be about 1.8% accretive to the Reit’s distribution per unit
[SINGAPORE] Digital Core Real Estate Investment Trust (Reit) acquired a 20 per cent interest in an Osaka data centre for about 13.2 billion yen (S$117 million), the Reit’s manager said on Wednesday (Mar 26).
The total acquisition cost comprised a purchase consideration of 13 billion yen, an acquisition fee of 130 million yen paid to the Reit’s manager, and other professional fees and expenses incurred of about 47 million yen.
The acquisition was completed on Tuesday and marks Digital Core Reit’s second investment in Osaka. The Reit already holds a 20 per cent stake in a neighbouring facility on the same data centre campus.
The acquisition is expected to be about 1.8 per cent accretive to the Reit’s distribution per unit (DPU), bringing it from US$0.036 to US$0.0367 on a pro-forma basis. The Reit’s net asset value per unit is not expected to change.
The newly acquired data centre is freehold and fully fitted, with a net rentable area of 193,535 square feet. It was completed in 2021 and is predominantly leased to leading global cloud providers.
The Reit acquired its stake from third-party vendor Mitsubishi Corporation via its wholly owned subsidiary, Digital CR Singapore 4, and financed the deal using yen-denominated borrowings on the Reit’s multi-currency global revolving credit facility. The manager expects to refinance the debt with long-term, fixed-rate yen-denominated debt over the near term, at an estimated borrowing cost of about 2 per cent.
The acquisition will raise the share of annualised rent contributed by Osaka from 7 per cent to 11 per cent. Aggregate leverage is projected to increase from 34 per cent to 37.3 per cent following the deal.
The manager said the deal supports the Reit’s strategy to expand its presence in top-tier global data centre markets. Japan is the world’s third-largest data centre market by revenue and a key connectivity hub for internet traffic between Asia and North America, it added.
Units of the Reit were trading up 1.9 per cent or US$0.01 at US$0.545 as at 9.26 am on Tuesday, after the announcement.
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