This article is from the Australian Property Journal archive
DAVID Di Pilla’s HMC Capital is backing the AI and cloud storage boom, acquiring data centre owner Global Switch Australia and its massive central Sydney facility for $1.937 billion, which HMC will use to seed its new global digital infrastructure platform that is eyeing off further assets in Australia and the United States.
HMC is undertaking a $300 million fully underwritten institutional placement to underwrite the acquisition.
Global Switch Australia’s colocation data centre in Ultimo has campuses on Harris Street and Pyrmont Street and, at 26MW and 72,800 sqm, is the only large-scale data centre campus in central Sydney. It currently brings $86 million in earnings per year and has scope to increase to 88MW.
The transaction is expected to reach financial close in early 2025, with Global Switch Australia to be acquired HomeCo’s new platform, DigiCo REIT, which is intended to be listed on the ASX alongside a new institutional unlisted fund.
HMC has assembled a global management team with an average of more than 20 years’
experience in the data centre sector for the platform, and said it has received “positive early feedback from potential third-party investors seeking exposure to high quality digital infrastructure assets at scale”.
“Global Switch Australia is a strategically located Tier 1 asset with significant repositioning and expansion upside. This is consistent with our strategy to build a world-class global platform providing investors with exposure to institutional grade digital infrastructure assets underpinned by attractive megatrends,” said Di Pilla, HMC managing director and CEO.
HMC said it has in due diligence to acquire multiple seed assets that are predominately in the United States. The assets include Tier 1 hyperscale and enterprise data centres, colocation facilities and higher returning development opportunities. Beyond the seed portfolio, it has identified “further longer-dated growth opportunities across brownfield value-add and greenfield development projects”.
HMC’s $300 million raising will be conducted at an issue price of $8.75 per share, which represents a 5.0% discount to the last traded price of $9.21 the previous day.
Placement proceeds are intended to deliver 20%-plus ROIC target from new funds management and co-investment income in the medium-term.
In a trading update, Centuria forecast annualised FY25 operating earnings per security pre-tax at 46c, representing growth of 24%, while and reaffirmed FY25 distributions per security guidance of 12c.
Hot property
The surge in demand for generative AI and cloud storage is seeing big players making big moves in the data centre sector space.
ASX-listed Macquarie Technology Group this week secured a $450 million refinancing for its data centre portfolio expansion following its $174 million acquisition of the Macquarie Park Data Centre Campus earlier this year.
ASX-listed data centre operator NextDC has raised nearly $2 billion this year to develop and boost facilities in Sydney, Melbourne and in Asia, while industrial real estate giant Goodman Group has sharpened its focus on the booming data centres sector, and harbours a growing pipeline that could have an end value of up to $100 billion.
Meanwhile, institutional investor Centuria Capital Group is looking to the future of the sector, acquiring a 50% in provider ResetData in another early-mover play – this time, with a focus on liquid immersion cooling technology that harbours potential to unlock value in existing office buildings.
Australia’s investable universe for data centres is set to almost double to $40 billion over the coming four years, according to CBRE’s Australia’s Data Centres 2024 report.
Australia ranks fifth globally and the second within the Asia Pacific region for built-out capacity. The Asia Pacific data centre market recorded a 1.3 GW boost in capacity over the first half of 2024, led by Sydney.
Turner & Townsend’s annual Data Centre Cost Index shows that power constraints, equipment delays and a skills and materials shortages might be the only things in the way of the surging sector. Earlier this year, new Australian data centre supply was fully contracted, CBRE said.
