[SINGAPORE] Japanese telco Nippon Telegraph and Telephone (NTT) is spinning off some of its data centres into a Singapore-listed real estate investment trust, or S-Reit, marking what is likely to be the largest S-Reit listing in a decade.
The last S-Reit to list at this size was Mapletree Greater China Commercial Trust, in 2013. Its initial public offering (IPO) raised US$1.3 billion.
The portfolio will comprise six of NTT’s data-centre assets, indicated to be transferred to the S-Reit – called NTT DC Reit – for about US$1.6 billion.
Four of the data centres are located in the United States, with three in California and one in Virginia. The fifth data centre is in Vienna, Austria, while the sixth is in Singapore. All the properties are freehold except for the Singapore asset, which has an initial lease term until 2040.
The offer price for the Reit will be US$1 per unit. The Reit is sponsored by NTT Ltd, part of the NTT Group. NTT has a market capitalisation of around US$95 billion as at Friday (Jun 27).
In its IPO prospectus lodged on Friday, NTT said the decision to list follows the belief that there is “significant growth” in the global data centre market, “with further headroom for expansion”. This includes consistent growth in data centre pricing globally, alongside increasing capacity absorption and declining vacancies, as well as a surge of capital allocation into data centres alongside increasing demand and consistent pricing growth.
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NTT also said that the group requires “significant funding” to expand its data centre footprint. NTT DC Reit’s growth trajectory is also dependent on its ability to source “high-quality, accretive acquisitions” post-IPO.
“This creates a mutually beneficial circle in which the sponsor group finances new developments using capital unlocked by divesting stabilised assets into NTT DC Reit, and NTT DC Reit is able to grow its portfolio with accretive acquisitions of high-quality stabilised assets,” NTT said in its prospectus.
The Reit manager’s chief executive officer is Yutaka Torigoe, who previously headed the Reit project office at NTT Global Data Centers.
Financial projections
According to NTT DC Reit’s pro forma financial statement – which is an earnings projection based on the financial results of its parent company and subsidiaries – net assets attributable to unitholders as at Dec 31, 2024, was US$1 billion. For the year ended Mar 31, 2024, revenue was US$178.7 million, while net property income was US$75.7 million.
The data centre portfolio is strategically diversified across key global markets, including the top 10 markets in the US and Asia-Pacific. The assets also demonstrate robust income-generation capabilities underpinned by a diverse base of premier customers and organic growth drivers.
Based on the forecast for the nine months ending Mar 31, 2026, revenue will be US$167.3 million, while net property income is expected to stand at US$75.9 million. The projected distributable income over the same period is US$57.3 million, while that for the year ending Mar 31, 2027, is US$80.4 million. The Reit expects to distribute up to 90 per cent of its distributable income.
GIC among investors
The Reit’s cornerstone investors include Singapore’s sovereign wealth fund GIC, which – in its first such investment in an S-Reit – will subscribe to 100.9 million units. This translates to an investment of US$100.9 million. Some of the other cornerstone investors are Hong Kong-based Viridian Asset Management, AM Squared, Pinpoint Asset Management, as well as US-based Ghisallo Master Fund.
NTT has one of the largest global data divisions, covering more than 20 countries and regions across the Americas, Asia-Pacific, Europe, the Middle East and Africa.
The new Reit IPO comes after recent years of a subdued market, where privatisations have outpaced new listings on the local bourse, with more Singapore companies choosing to list on global exchanges. The listing also comes after the Monetary Authority of Singapore’s equities market review group put forth several proposals to boost the local equities market earlier this year. The proposals by the group, which was set up last August, include introducing tax incentives to spur more listings and a S$5 billion investment fund for asset managers to improve the bourse’s liquidity.
Major IPO listings that occurred recently include those of Digital Core Reit, which raised close to US$1 billion in 2021, and fibre optic cable owner NetLink NBN Trust, which generated US$1.8 billion in 2017.
