NEXTDC told to hold off amid data centre property group expansion plans

Asia Pacific Data Centre Group (ASX:AJD) has called on NEXTDC (ASX:NXT) to defer its plan to wind up the Asia Pacific Data Centre Trust as the data centre property group eyes expansion plans to “become a major data centre owner throughout the Asia Pacific region”.

Asia Pacific Data Centre Group is a special purpose real estate investment trust (REIT) which was established to own properties – including land and buildings – that are operated or being developed as data centres.

The sole assets of the publicly-listed group, which was originally spun off by NEXTDC as an independent entity, are three data centre properties, Sydney (S1), Melbourne (M1) and Perth (P1), all of which are occupied by NEXTDC under long-term lease arrangements.

In July, NEXTDC made a multi-million dollar bid to wrest back ownership of APDC after investment firm, 360 Capital Group moved to buy up control of the data centre property group.

On 9 October, NEXTDC submitted an application to the Takeover Panels against the 360 Capital Group’s bid to buy out Asia Pacific Data Centre Group. The data centre operator wanted to get its hands on all the APDC shares that had been acquired by 360 Capital over the space of several months.

Since the decision by the Takeovers Panel to not intervene, 360 Capital Group has been quietly buying up a greater shareholding of the data centre property group, attaining 65.52 per cent of the voting rights in the company, as of 15 November.

Just days ago, NEXTDC told shareholders it was concerned over the governance track record of the 360 Capital Group, which now controls APDC, with “limited true independent controls”.

As such, it called a special shareholder meeting over its concerns about a $100 million debt facility with National Australian Bank (ASX:NAB) that 360 Capital Group (ASX:TGP) is seeking on behalf of Asia Pacific Data Centre Group.

The winding up of the Trust would result in the realisation of its assets associated with Asia Pacific Data Centre Group and the distribution of the net cash proceeds in order of priority to all members.

Now, Asia Pacific Data Centre Group has said that the independent board committee (IBC) it has established to assess NEXTDC’s winding-up proposal considers it in the “interests of all stakeholders that NEXTDC engages constructively and defer its wind-up proposal”.

Ultimately, Asia Pacific Data Centre Group, under the de facto control of 360 Capital Group, plans to acquire approximately $150 million of data centre assets to grow the group’s portfolio.

Asia Pacific Data Centre Group (APDC) said it has also entered into preliminary discussions with third parties, including “a global data centre owner/operator” regarding the potential to significantly expand APDC in Australasia.

“APDC has the opportunity to become a major data centre owner throughout the Asia Pacific region in line with its strategy,” the group said.

The group also said that, following Equinix’s plans to acquire Australian data centre operator Metronode for $1.03 billion, its own property portfolio may be worth “significantly more” than implied by the current valuations, revealing that it is eyeing up potential sale opportunities in the local market.

“Discussions with selling agents have reaffirmed that APDC’s portfolio could command a yield in this proximity which, based on a net income of approximately $14.06 million p.a., would equate to a portfolio value of circa $300 million representing an NTA of approximately $2.40 per security,” the group said.

“In order to decide whether it is in securityholders interests to proceed with a sale of some or all of APDC's assets as compared to other opportunities, the IBC has resolved to seek expressions of interest in respect of the sale of APDC's assets.

“The IBC [independent board committee] expects that agents will be appointed imminently and the process is expected to [be] completed by mid-February,” it said.