Australia's Macquarie Data Centres is acquiring its data center campus in Sydney.
The company this week announced the acquisition of its existing Macquarie Park data center campus from Singapore's Keppel DC REIT.
The companies have entered into a binding agreement which will see Macquarie acquire the existing Intellicentre 2 and Intellicentre 3 East land and buildings at 17-23 Talavera Rd, Macquarie Park for AU$174 million ($111.7m). Keppel will be divesting its 100 percent freehold interest in the campus.
The purchase, which will be made through a wholly owned subsidiary of Macquarie Data Centres Group, is expected to close in the second half of the year.
The deal will be partially funded from a AU$90 million ($57.8m) loan note that will be issued to Keppel DC REIT. The data center note has an initial interest rate of 6.97 percent over its eight and a half year term and is unsecured. The company also announced an AU$100 million ($64.2m) share placement in two tranches.
“The acquisition of the land and buildings at Macquarie Park gives us long-term control of the campus at a time when we are making a significant investment in expanding capacity by building IC3 SuperWest,” said David Tudehope, Macquarie Technology Group CEO. “Ownership of the land and buildings will support our plans to accelerate growth in Macquarie Data Centres. Purchasing the land and buildings also delivers on the expectations of our customer base which values our Australian ownership, data security, and our sovereign credentials.”
Loh Hwee Long, CEO of Keppel DC REIT Management, said the deal presents "a unique opportunity for Keppel DC REIT to crystallize value from its investment in Intellicentre Campus at a highly attractive premium," while continuing to earn "recurring income that mirrors the rents that we have been receiving from the asset.”
As well as greater control of future development at the campus, Macquarie said the deal provides greater flexibility around the company’s future capital management and affords an opportunity for improved terms for senior debt upon refinancing. The company also said owning the land and buildings delivers the “sovereign credentials” expected by its major customers.
Post Acquisition, the site’s AU$96 million ($61.55m) lease liability and the AU$89 million ($57.06m) right-of-use asset will be derecognized on Macquarie’s balance sheet.
Keppel DC REIT said it will re-invest AU$90 million ($57.8m) of the sale proceeds into an Australia data center note issued by Macquarie Data Centres Group.
Through this note, Keppel DC REIT will "retain its exposure to the Australia data center market, and receive a regular income stream starting from approximately AU$6.3 million ($4m) per year, with a CPI-linked annual escalation mechanism, for 8.5 years,” the company said. “The income stream from the AU DC Note will mirror the rental the REIT would receive from Intellicentre Campus if the asset was held for another 8.5 years.”
Keppel said part of the funds from the sale not loaned back to Macquarie will repay existing loans of approximately AU$43.2 million ($27.7m) relating to the original investment of Intellicentre Campus, and the remaining AU$22.3 million ($14.3m) will be used for repaying debt, funding acquisitions, capital expenditures and/or working capital.
The Macquarie Park campus currently has two large data centers which are fully built and fitted out.
The Intellicentre 2 facility was built in 2012, while Intellicentre 3 East was completed in 2021. A third data center – Intellicentre 3 SuperWest – is in development and expected to be completed in Q3 2026.
Macquarie Technology Group was advised by J.B. North & Co Pty Limited as financial adviser and DLA Piper as legal adviser.
