Centuria buys into Nvidia boom with office-friendly data play
Fund manager Centuria Capital Group is buying a 50 per cent stake in data centre operator ResetData for $21 million, in a bold bet that the rising need for storage, coupled with a new breed of smaller data servers, can fill unused office space.
The ResetData acquisition is the ASX-listed Centuria’s latest foray into data centres, and came about mainly because of the data centre operator’s partnerships with companies such as Nvidia and Dell, and a focus on new data centre technology, Centuria chief executive John McBain said.
The new liquid-cooled technology allows denser data servers to be set up in smaller existing spaces such as office towers, rather than the much larger purpose-built, warehouse-sized facilities typically established in outer suburban industrial estates.
While sagging real estate valuations and higher financing costs have challenged some of Australia’s big property players over the last financial year, companies such as Goodman Group have outperformed the market, partly through their exposure to data centres.
“One of the things that we uncovered during due diligence was ResetData has strong relationships with Nvidia and Dell,” Mr McBain said at an analyst briefing.
“What the Nvidia people told us was that when they’re designing chips from now into the future, they’re designing chips that aren’t capable of being cooled in an air-cooled environment. Just wanted to amplify that point because I think that’s absolutely crucial to us.”
Smaller footprint
Unlike most data centre operators in Australia, Reset Data uses proprietary LIC (liquid immersion cooling) technology, which is designed to provide a smaller footprint compared with traditional data centres. This technology allows ResetData data centres to be located in existing office buildings, rather than outer-urban warehouses, according to Centuria.
As part of the deal, Sydney-based ResetData will also enter into a 10-year lease at one of Centuria’s underutilised offices, 818 Bourke Street, in Melbourne. Centuria said the move could lift the property’s valuation by 10 per cent to 15 per cent, net of costs.
Reset Data has two small data centres, including a 150-kilowatt facility in Investa’s 151 Clarence Street tower in Sydney.
The acquisition will provide revenue through various sources, including rent from providing data centre operators with space to bring in hardware, and revenue from providing cloud services to companies.
Mr McBain also said ResetData was in negotiations to provide cloud services to a large telco, facility provider and the government.
Given the rise in demand for data centres, Centuria said it was open to creating an institutional fund focused on this asset type.
“We have quite a few of our institutional investors that have raised funds for investments into that data centre space. So we think if we do scale up, with some of the larger opportunities that we’ve looked at, there could be potential to probably put an institutional fund around it as well,” he said.
The group noted that the investment would be funded with its undrawn funds, and is expected to be earnings neutral in FY25 and accretive to earnings per share from FY26.
Centuria has a call option to acquire the remaining 50 per cent of Reset Data in 2029.
