Based on JLL’s valuations, the estimated gross development value will come up to EUR29.5 billion over 15 years, based on a 100% interest in the fund.
These sites are currently progressing through development approvals and are in various stages of securing pre-leases with major tenant customers, SERT added in its June 24 statement.
SERT’s final stake in the data centre fund is expected to range between 4% to 8% depending on the final quantum of investments made by the other investors. SERT’s managers have indicated that they are open to potentially increasing the trust’s stake in the fund or selling its stake and crystallising value in future.
“As the transaction is done at a discount, SERT expects a valuation uplift for its stake upon completion. In addition, as the [data centre] fund progresses and various milestones – eg power supply and tenants – are secured, the value of the fund is expected to grow,” says Natarajan.
He adds that the transaction is to be funded by debt using SERT’s existing revolving credit facilities (RCF), bringing SERT’s post-transaction gearing to be around 43%. That said, SERT’s gearing is expected to drop slightly by the year-end from revaluation gains for its European portfolio on the back of rate cuts.
“As the [data centre fund] is currently not income-generating, the debt funding cost will be paid out of the fund’s valuation gains – hence, no impact is expected on [SERT’s] DPS (or distribution per stapled security),” the analyst notes.
At this point, Natarajan has kept his estimates unchanged with SERT’s FY2025 ending Dec 31 DPS to be at EUR0.13. The analyst has also maintained his “buy” call and target price of EUR1.90.
