ELITE UK Real Estate Investment Trust’s (Reit) manager has submitted a planning application to develop a new 80-megawatt (MW) data centre campus at Peel Park, Blackpool, England.
On Thursday (Oct 3), the manager said this comes after it received “positive feedback” from the local authority during the pre-planning phase.
The proposed campus will be built on a site located on 15.65 hectares (ha) of freehold land, of which existing buildings sit on a land area of about 3.95 ha.
It will benefit from a nearby transatlantic subsea internet cable linking Blackpool with North America and Europe. The site is also located less than 5 km to the town centre.
Elite UK Reit’s manager said it has secured sufficient power supply for the proposed facility.
It is also in discussions to bring renewable power supplies to the site from wind power infrastructure nearby – thereby enabling the delivery of a sustainably powered data centre.
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Joshua Liaw, chief executive of the manager, said Peel Park’s strategic location offers low-latency and reduced emissions, making it “highly attractive” to both data centre operators and end-users.
The planning application was submitted as part of Blackpool’s Growth and Prosperity programme, which includes development projects in the 144-ha Blackpool Airport Enterprise Zone as well as the Talbot Gateway Central Business District.
Elite UK Reit’s manager said it has been working with the Department for Work and Pensions (DWP) to ensure ongoing occupational requirements are taken into consideration in its planning application – with DWP’s ongoing occupation needs remaining a priority.
Notably, its proposed data centre campus will be located next to existing DWP buildings.
The manager is also “evaluating a number of strategic options” for Peel Park, which may include strategic divestments or partnerships with data centre operators.
Units of Elite UK Reit were trading £0.005 or 1.6 per cent lower at £0.315 as at 10.21 am on Thursday, after the announcement.
The news comes days after advisory platform Beansprout initiated coverage on Elite UK Reit, rating the European-focused trust at “buy” with a target price of £0.44.
This implies a 7 per cent forward yield for FY2024, and 7.8 per cent for FY2025.
Analyst Peggy Mak said she sees room for the Reit’s assets to appreciate – particularly when their leases are renewed.
She believes a “substantial” 96.9 per cent of the Reit ’s leases, which are due to expire in 2028, is weighing on its unit price as well as the value of its assets.
“As Elite is among the largest providers of critical social infrastructure to the DWP and other government departments, the risk of non-renewal for all leases is remote, in our view, though it is difficult to say for sure how many will be renewed,” said Mak in a Sep 30 report.
Against the backdrop of an improving macroeconomic environment, the analyst also believes further rate cuts would also reduce borrowing costs and raise distribution income for the Reit.
Beansprout is projecting a 25 basis point rate cut to take place in the fourth quarter of 2024, followed by a full percentage point cut in FY2025.
“Elite has also expanded its mandate to include other asset classes. A conversion to residential use would boost valuation,” Mak added.
