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HMC Capital (ASX: HMC) has reached a deal to acquire a Sydney CBD data centre for almost $2 billion, forming the seed asset for a new real estate investment trust (REIT) focused on digital infrastructure that will be underwritten by a $300 million institutional equity raise.
HMC is acquiring Global Switch Australia, a 26MW colocation data centre that generated earnings of $86 million in the 2023 calendar year, with 72,800 square metres of floor space and 86 unique customers.
This floor space represents around 17 per cent of the floor size of the UK-based Global Switch across its data centres in Europe and the Asia-Pacific, including in Amsterdam, Madrid, Singapore and Hong Kong.
Following the $1.937 billion acquisition, the centre will form part of HMC's new global DigiCo Infrastructure REIT, to be listed on the ASX alongside a new institutional unlisted fund.
HMC has assembled a global management team for the purpose, and is currently in exclusive due diligence for a further three triple-net lease North American seed DigiCo assets, comprising hyperscale and enterprise facilities as well as development assets.
The group has also identified further longer-dated growth opportunities across brownfield value-add and greenfield development projects.
To underwrite the acquisition, HMC is undertaking a fully underwritten institutional equity raise for $300 million at a share price of $8.75, representing a 5 per cent discount to the last trading price. Demonstrating the current market optimism around the company, the equity raise price is 44 per cent higher than its $6.08 level at the start of 2024.
"We are excited to today announce a major acquisition to seed our global digital infrastructure platform," says HMC managing director and CEO, David Di Pilla.
"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.
"Digital infrastructure represents a major funds management growth opportunity for HMC and we believe the establishment of both a listed and unlisted vehicle will enable HMC to take advantage of high quality acquisition opportunities across the value chain to generate attractive risk adjusted returns."
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