Singaporean Trust Acquires 29 US Data Centers for $1.3B

The Sila Realty Trust portfolio includes a data center at 250 Williams St. NW in Atlanta. Image by Michael Barera via Wikimedia Commons

Mapletree Industrial Trust has agreed to purchase the entire 29-property data center portfolio of Tampa, Fla.-based Sila Realty Trust Inc. for $1.32 billion, significantly boosting the Singaporean trust’s investment in server farms in the U.S.

Through the transaction, which is expected to close next quarter, Mapletree Industrial Trust will snap up its first data centers in Chicago, Los Angeles and Houston while expanding its overall presence to 13 of North America’s top 15 data center markets.

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The portfolio spans 3.3 million square feet across 18 states and is 87.8 percent leased to 32 tenants, including NYSE- and NASDAQ-listed firms and Fortune Global 500 corporations. The properties have a long weighted average lease expiry of 7.9 years with 1.7 percent of the leases expiring within the next three financial years.

In addition to Illinois, California, and Texas, the portfolio is also located in Arizona, Connecticut, Georgia, Illinois, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia.

Tham Kuo Wei, CEO of the trust’s manager, cited the resiliency and growth opportunities of the data center sector, accelerated by the pandemic-era growth of digital information, cloud adoption and e-commerce, according to a prepared statement. The portfolio being acquired by the trust features “long leases with embedded rental growth,” he added.

Growing interest

Mapletree Industrial Trust chalked up its last major U.S. data center purchase in September 2020, when it agreed to buy an unspecified facility in Virginia for at least $204 million. That deal came soon after the trust wrapped up its $211 million acquisition of the remaining 60 percent interest it did not already own in a collection of 14 U.S. data centers. The seller was Mapletree Redwood Data Centre Trust, an entity jointly formed by Mapletree Industrial Trust and its sponsor, Mapletree Investments.

In September 2019, Mapletree Industrial Trust and Mapletree Investments agreed to buy a portfolio of 10 data centers from Digital Realty for a total of about $557 million. The duo also formed a joint venture for another three hyper-scale data centers, bringing the two deals to a combined consideration of nearly $1.4 billion.

Demand for wholesale data centers in primary U.S. markets dropped 11 percent in 2020 compared to the previous year, CBRE found in its most recent report on the sector. The decrease was largely driven by companies temporarily freezing their information technology budgets to reassess their digital infrastructure.

Average rental rates fell in the first half of the year but began to stabilize in the second half, with the average asking price of $121 per kilowatt-hour per month holding steady in primary markets. Despite the slackening demand in the overall market, publicly traded data center REITs performed strongly, which spurred investor interest in purchasing assets directly.

The brokerage expects investment in the sector to increase in 2021 based on strong projections of revenue growth, while substantial preleasing points to increased leasing volume during the year.