Beyond providing steady increasing income, the future growth achievable by investing in REITs supporting the digitalisation of society must not be overlooked. Testament to this is the premiums at which private markets value these publicly listed assets, with ever increasing private equity interest seen in this space.
This is particularly evident within the data centre sub-sector, with private equity firms acquiring best-in-class listed digital infrastructure companies. Last year, US listed QTS was acquired by Blackstone at a 20.9% premium to the undisturbed share price, whilst Spanish data centre REIT CyrusOne was acquired by KKR and Global Infrastructure Partners at a 24.7% premium to the undisturbed share price.
Private equity interest is not reserved just for data centre REITs, Uniti Group, a A$3.4bn market cap Australian listed ‘fibre to the home’ network owner and developer, was recently the target of competing take-over bids by two private equity consortiums, and chose the one led by Canada's Brookfield Asset Management and fund manager Morrison & Co.
The digital infrastructure sector offers both inflation proofing and future proofing. The REITs which own and operate digital infrastructure assets provide an attractive investment opportunity, with growing income and real pricing power whilst the acceleration of the ‘fourth industrial revolution’ with the pandemic, how we live, work and play has fundamentally shifted making these assets, data centres, fibre optic networks, logistics warehouse supporting e-commerce and mobile communications towers, critical.
1 MSCI World IMI Core Real Estate GBP Index
2 MSCI World IMI Core Real Estate Total Return GBP Index
Matthew Norris, Fund Adviser to the VT Gravis Digital Infrastructure Income Fund, Director of Real Estate Securities.
To find out more about the VT Gravis Digital Infrastructure Income Fund, please click here