NextDC offered APDC datacentres it occupies for 'illogical' AU$300 million

Asia Pacific Data Centre Group offers NextDC the datacentres it leases for a valuation it has already trashed.
Written by Chris Duckett, Contributor

The spat between NextDC and Asia Pacific Data Centre Group (APDC) has continued through the Christmas break, with APDC offering the sell the datacentres solely occupied by NextDC back to it for AU$300 million.

APDC was originally created as a real estate investment trust that was responsible for the buildings and land upon which NextDC operates its business, and under the terms of the leases, NextDC has first right of refusal on any sale of the datacentres.

The ownership of APDC changed in November following a bidding war between NextDC and 360 Capital, which saw the latter emerge triumphant with 67 percent ownership, and subsequently install its preferred board members.

Last week, APDC appointed agents to market the sale of the datacentres, and said on Thursday it had received "over 50 qualified enquiries and requests for confidentiality agreements".

Based on the recent sale of Metronode to Equinix for AU$1 billion, APDC believes its assets are worth around AU$300 million.

According to APDC, NextDC has 20 days to accept its offer, and if not taken up, it will be able to sell its datacentres to others for AU$300 million or more.

However, NextDC struck out at such valuations last Thursday, stating that Metronode was a datacentre operator and not a real estate trust.

"APDC's reference to Metronode's assumed 4.73 percent acquisition yield is akin to one suggesting that a property landlord should trade on the same capitalisation rate or multiple as its tenant be they BHP or Google," NextDC CEO Craig Scroggie said at the time.

"This has no logic and is simply incorrect".

NextDC said APDC assets were recently valuated "only a few months ago" at AU$213 million.

Earlier in December, NextDC announced its intention to wind up the trust underpinning APDC, stating that it is unhappy with the direction that 360 Capital is taking the company under its steerage.

A meeting has been set for January 31, 2018 to allow trust members to vote on the wind up proposal.

APDC said last week that as the decision to undertake a capital redistribution, which sits at the heart of NextDC's grievances, had not been made, the wind up proposal was "premature and ill founded".

The sole tenant of APDC's datacentre facilities in Sydney (S1), Melbourne (M1), and Perth (P1) remains NextDC, while APDC said it has submitted non-binding offers to acquire AU$150 million worth of datacentre assets to grow its portfolio.

"APDC 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," the company said last week. "APDC has the opportunity to become a major data centre owner throughout the Asia Pacific region in line with its strategy."

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