IREIT Global has landed a 12-year major new lease at the Sant Cugat Green property for around 5,300 square meters of vacant data center space, the REIT said in a filing to SGX Tuesday.
The lease would bring the property to 97.2 percent occupancy on a pro forma basis, from 77.1 percent as of end-March, the filing said.
“This is a milestone lease at Sant Cugat Green. Since 2016, the data centre space has not been leased out and is considered as structurally vacant,” Louis d’Estienne d’Orves, CEO of the REIT’s manager, said in the statement.
“However, we have managed to fill up the entire space in approximately two years after we first acquired a stake in the property towards the end of December 2019 – a great achievement considering the challenging operating environment caused by the Covid-19 pandemic, rising inflation, and geopolitical tension in Europe,” he added.
Total capital expenditure of around EUR7.8 million has been agreed on to upgrade the power-supply requirements and other features, with IREIT contributing EUR5.4 million, while the tenant will be responsible for the remainder, the filing said.
D’Estienne d’Orves stated the deal was “unique” as the tenant was taking up a long-term lease and investing substantially with the REIT to create a high-quality data center improving the property’s long-term marketability.
Under the new deal, the lease includes a two-year renovation phase, which will be a rent-free period, starting from 20 June 2022, with a break option at the end of 19 June 2030, which would impose a break penalty, the filing said. The initial rent is around EUR700,000 annually, with an annual rent indexation based on a 3 percent margin above Spain’s consumer price index, IREIT said.
The tenant is a joint venture between two Spanish companies in the information technology and power electronics markets, the filing said.