Centuria Industrial REIT has become the country’s largest Australian-focused industrial property landlord after beating rivals to buy Telstra’s data centres in a $417 million deal.
The fund manager said the deal was a game-changer and now elevates its assets under management to $2.01 billion. Other potential buyers for the telco’s property included UniSuper and Charter Hall.
The Telstra data centre comprises 10 buildings on 3.2 hectares at Clayton in Melbourne’s south-east with the telco signing a 30-year lease with the new owners. In addition to the data centre, the deal includes two warehouses in Sydney’s west and Melbourne’s Tullamarine, taking the total to $447 million.
Tesltra’s chief executive Andy Penn said the sale was another step in the company’s T22 strategy. “As part of T22, we have an ambition to monetise up to $2 billion worth of assets to strengthen our balance sheet. This deal means we have now reached over $1.5 billion,” Mr Penn said.
Centuria head of funds management Ross Lees said the deal was “a significant, game-changer for the industrial fund and reconfirms its position as Australia’s largest listed pure-play industrial REIT”.
He said there was rising demand for data centres as more people work and shop from home during the coronavirus pandemic. This change in consumer behaviour has led to a significant surge in the need for data storage and processing requirements, which is underpinning demand for large-scale industrial property assets.
Centuria REIT”s fund manager Jesse Curtis said the acquisitions will be funded through a combination of a $340.8 million capital raising and $151.1 million of debt drawn from existing debt facilities.
“Telstra will become the fund’s largest tenant, representing 13 per cent of the portfolio’s income, ” Mr Curtis said.
“We have seen an uptick in market penetration of online shopping and we expect this trend to continue to accelerate and data centres are linked to this.”
For the year, the fund reported a 13.6 per cent rise in funds from operations to $63.5 million, which was in line with market expectations.
COVID-19 had only a minimal impact on rent payments for Centuria, which paid a distribution of 18.7¢ up from 18.4¢ in the 2019 year.