Investment trust insider on property data centre schemes – Richard Williams: Reits pile in on data centre boom
Property trusts are falling over themselves to get in on the data centre play, but only the very best will break ground.
Data centres are the hot investment theme right now, so it was little surprise to see the floatation of a new real estate investment trust (Reit) focused on the sub sector on a dual US and London listing last week.
The $12.5bn IPO valuation of Fermi (FRMI) was surprising though, especially given the infancy of the company and lack of revenue, but perhaps reflects investor appetite for data centres.
If you baulk at the valuation of Fermi, there are other ways to play the data centre trade in the UK. Last week, my colleague James Carthew wrote about the investment companies geared towards power utility firms and new water technologies – critical for cooling servers – and previously highlighted logistics developer Tritax Big Box Reit’s (BBOX) move into the sector.
Property players are falling over themselves to bring forward data centre schemes, with developments announced this year alone totalling seven gigawatts (GW) – more than four times the current 1.6GW capacity of the existing UK network.
Not all will be successful and only the very best sites will break ground.
A less well-known property company with an enviable landbank primed for data centre development is Harworth Group (HWG). The company hit the headlines last year when it sold a 48-acre site near Leeds to Microsoft for £106.6m for the development of a hyperscale data centre.
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