Brisbane-based fund manager Cromwell Property Group is launching a $US1 billion (A$1.4 billion) fund to serve its prospective data centre pipeline in Europe and the Asia-Pacific.
The group has partnered with Stratus Data Centres, a subsidiary of private equity group ESX Capital, who will be responsible for project development, leasing, design and construction and manage the rollout of a data centre properties across the two international markets.
The new fund, to be known as the Stratus Cromwell Data Centre (SCDC) Fund, which is targeting an eventual gross asset value of over US$1 billion is aiming to raise $US300 million from wholesale investors in its first close by the end of this year.
Cromwell highlighted that 25 per cent of the fund's portfolio had already identified through two strategic sites.
The first of which is a two-stage, 100-megawatt data centre on a 2.4-hectare site east of London set to be powered entirely by renewable energy.
Cromwell said negotiations with potential tenant operators were well advanced for the facility with construction on track to be completed in 2021.
The second project, located on a 13.8-hectare site in Frankfurt, is a multi-stage 300MW facility is also well advanced with pre-leasing agreements and planning processes.
Once completed, the centre will be recognised as one of the largest data centre campuses in western Europe.
Cromwell chief investment officer Rob Percy pointed to the exponential growth of data created by social media, mobile devices, video streaming and cloud computing, underscoring that demand had now been accelerated by the Covid-19 pandemic.
“The partnership is another good example of our ‘Invest to Manage’ strategy in operation,” Percy said.
“With strong real estate asset backing and long-term leases against world class cloud operators, data centre properties can provide investors with stable income, downside protection and strong potential upside.”
Cromwell's Singapore-listed fund will take 50 per cent stakes alongside the SCDC Fund in the two seed assets already under negotiation.
Cromwell’s significant offshore interests—with more than $6 billion in funds under management in Europe—makes it one of Australia’s largest funds with direct international property market exposure.
The group's London and Frankfurt centres, which are set to seed the fund, will now be followed by facilities in key gateway cities across Europe including Dublin and Milan, and in Asia, including Tokyo, Manila, Jakarta and Mumbai.
Cromwell's decision to target tier 1 and tier 2 data centre markets in Asia comes as an upsurge of demand for data centres has outstripped supply across the region.
According to CBRE’s 2020 Asia Pacific Investor Intentions Survey, data centres have been one of the best performing assets in the REIT market this year, providing total returns of around 19.3 per cent in the first five months of 2020.
Tokyo has already seen 76MW of new data capacity completed between the 2019 first quarter 2019 and 2020 while Mumbai, supported by a new government policy that will enable the private sector to build data centre parks across the region, currently holds a total IT capacity of 215 MW.