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The real estate investment vehicle has for years acquired facilities building one of the US’ largest private portfolios.
Founder and Editor, The Tech Capital
August 24, 2021 | 12:00 AM BST
Data centres are a profitable business and Tampa-based Sila Realty Trust (OTCMKTS: CVMCA) – former Carter Validus – has achieved a considerable gain on its hosting portfolio.
In total, the original aggregate acquisition cost of Sila’s 29 data centre portfolio determined in accordance with GAAP, inclusive of capital improvements on the properties, was approximately US$965,215,000.
Last July, the firm closed on the sale of its hard assets to wholly-owned subsidiaries of Mapletree Industrial Trust for an aggregate sale price of $1,320,000,000.
That means that Sila sold the portfolio for $354,785,000 – or a 36.76% – more than it spent building it.
Some of the data centre facilities included in the sale increased in value by more than 50% between Sila acquiring them and selling them. For example, two data centres in Rancho Cordova were sold for a combined total of $77 million, 50% more than what Sila originally paid for them.
Michael A. Seton, CEO and president of Sila, said: “The sale of the data centre portfolio represents a substantial gain for the company and firmly positions Sila Realty Trust, Inc. as a pure-play healthcare REIT.
“We believe that our strong healthcare portfolio, diversified by geography and tenancy, coupled with our fortress-like balance sheet composed of significant net worth, low leverage and ample liquidity for growth opportunities and further diversification of the portfolio, will enhance the overall strength and position of the company for a liquidity event through a public market listing, subject to, among other considerations, market conditions, within the time frame communicated during our offering.”
Sila’s board of directors has authorised and declared a special cash distribution to the company’s stockholders of record as of the close of business on July 26, 2021.
The special cash distribution was equal to $1.75 per share of common stock and paid on or about July 29, 2021.
The special cash distribution will be payable to stockholders from legally available funds therefor.
The special cash distribution was determined by the board primarily based on the sale of the data center properties.
The board also considered numerous factors in determining the special cash distribution amount, including, without limitation, available proceeds after the paydown of debt, enhancing the value of the Company through growth opportunities which, the company believes, will position it to achieve liquidity for its stockholders within the timeframe communicated during its offering.
Of the approximately $1,320.0 million in aggregate sale price from the sale of the data centre properties and after deducting approximately $29.4 million for transaction closing costs and prorations related to the Sila’s portion of rents, operating expenses, lease commissions and additional credit for tenant improvements, approximately $392.7 million for the special cash distribution, approximately $853.8 million for the pay-down of property and corporate level debt associated with real estate property sales (approximately $450.8 million at the property level and approximately $403.0 million at the corporate level), exclusive of defeasancy and loan costs of approximately $30.1 million, and $7.5 million as payment consideration per the Internalisation Transaction purchase agreement’s accelerated provisions; all of which ultimately provided for approximately $6.5 million in retained cash.
These remaining proceeds will be used to provide the Sila with what it believes will be adequate liquidity, through cash and undrawn availability under its credit facility, which is typically desired for a company which may be listed for public trading.
In addition, the board of the company has retained the right to authorize additional cash distributions to stockholders in the future.
Moelis & Company LLC acted as lead financial advisor to the company, and Holland & Knight LLP served as legal counsel to the company.
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