Sila Realty Trust, the US REIT formerly known as Carter Validus, has agreed to sell all its data centers to Singaporean investment company Mapletree Investment Trust.
Sila has 29 data centers in the US, which will be sold to Mapletree for $1.3 billion. The sale marks a significant exit: Carter Validus has been acquiring data centers for some years, and will be concentrating on healthcare properties in future.
For Mapletree, it's a continuation of its strategy of buying data centers with sitting tenants, which has previously seen it buying from other operators including Digital Realty.
Carter Validus was founded in 2009, and owned data centers and healthcare properties leased to tenants, buying properties occupied by organizations including AT&T - through the Carter Validus Mission Critical REIT, and REIT II. It's been rumored to be selling its data centers since as long ago as 2017, and previously shifted some 14 data centers to Mapletree in 2017.
Carter Validus founder John A Carter stood down as CEO in 2018, and left in 2020. In September 2020, Carter Validus consolidated the Carter Validus Mission Critical REITs, and a couple of other operating entities into one company, renamed Sila Realty Trust. That cost $40 million to do, but simplified its operating expenses and, apparently, cleared the decks for the transaction announced today, in which Sila left data centers.
“We are pleased to enter into this agreement with MIT to sell our data center properties," said Michael Seton, CEO and President of Sila. "This action marks another key step in Sila Realty Trust’s evolution to provide a clear path for the Company to pursue a strategy as a pure-play healthcare REIT. Upon closing this transaction, we will continue to be focused on enhancing the value of our company through internal and external growth opportunities which, we believe, will maximize optionality to achieve liquidity for our stockholders within the timeframe communicated during our offering.”
Mapletree has been buying other US data centers, including a $208 million Bank of America facility in Virginia.
When Digital Realty sold a set of buildings to Mapletree, DR's CEO Bill Stein told DCD that Mapletree is a company that wants revenue from leased buildings: “The buildings are basically full, and there is very little opportunity to create additional value in the asset. Mapletree appreciates this rich return, but our core investors are looking for a higher return. Our guidance is a nine to eleven percent cap rate. That’s basic real estate.”
The Sila transaction has a few separate parts, all of which should be complete during the third quarter of 2021.