INETREIT, the first and only real estate investment trust in Thailand that invests directly in data center assets, is advancing with its first capital increase to further invest in the INET Data Center Project 3, "INET-IDC3 Phase 2," to enhance operational capabilities in response to the continuously growing demand for cloud services and the digital era mega-trends. The trust emphasizes its investment in freehold properties, which have no time limitations on investment.

Mr. Sutakarn Naenna, Managing Director of iNet REIT Management Co., Ltd., as the trust manager, revealed that an independent market research report by Merlins Solutions International Co., Ltd. indicates that the overall data center business and cloud service provision via the internet (Public Cloud) in Thailand is on a continuous growth trajectory, with a total market value of $2.07 billion and $919.7 million in 2022, respectively. It is projected that from 2023 to 2027, the total market value of the data center business in Thailand will grow at an average rate of 4.8% per year, while the total market value of all types of cloud services in Thailand will grow at an average rate of 19.5% per year. This growth is primarily driven by advancements in wireless technology, widespread connectivity and access to devices via the internet, remote work, such as Edge Connection, Big Data Analytics, and audio-visual streaming, among others, leading to a significant increase in demand for various connectivity systems. Additionally, positive factors include government policies promoting the digital economy, smart city development, and changing consumer behavior towards increased use of digital technology, along with the expansion of 5G service areas.

Moreover, Internet Thailand Public Company Limited (INET), as the main sponsor and tenant, is a leading provider of comprehensive ICT infrastructure services in Thailand with over 27 years of business experience. It holds the number one market share in Thailand's cloud service sector at 12.74% in the second half of 2022, according to a financial investment analysis report by Merlins Solutions International Co., Ltd. Recently, INET has expanded its investment in the INET Data Center project to accommodate growth potential from the transition to the digital era and to meet the increasing demand for cloud data storage. The INET-IDC 3 project, located in Saraburi province, is INET's latest state-of-the-art data center, offering high stability and security, certified with ISO/IEC 27001:2013, ISO/IEC 20000-1:2018, and ISO 22301:2019 standards, with a Service Level Agreement (SLA) for IDC Infrastructure Uptime of 99.90%.

INETREIT, established in 2021, is the first and only trust fund in Thailand that invests directly in data center assets. Currently, its main asset is the INET-IDC3 Phase 1 project in Saraburi, which involves a leasehold investment with approximately 22 years remaining (ending December 31, 2588). INETREIT leases this asset exclusively to INET, with an annual rent adjustment agreement of 2% per year.

Given the aforementioned growth trends in the data center and cloud markets, along with INET's growth trajectory, INETREIT recognizes that the assets of the INET-IDC3 Phase 2 project are ready for the trust to invest. INET-IDC3 Phase 2 is located in the same area as Phase 1, and this time the trust will invest in full ownership, including:

  1. The land on which the INET-IDC3 Phase 2 project is situated.
  2. The land for the substation control building.
  3. The land for the common utility building of the entire INET-IDC 3 project.
  4. The building and its components, along with systems related to the services of the INET-IDC 3 Phase 2 project, covering approximately 3,900 square meters.
  5. Rack cabinets with related connectivity equipment used in the INET-IDC 3 Phase 2 project, totaling 246 racks.

After the capital increase, the trust will have a leasehold investment ratio of 58% and a freehold investment ratio of 42%, with the average weighted remaining lease term of the trust increasing from 22 years to 54 years. INETREIT will lease the additional assets to INET exclusively for 30 years, with an annual rent adjustment of 2%, resulting in stable and growing income for the trust alongside the digital era.

Mr. Phaedimphop Songkhaew, Acting Chief Executive Officer of Krungsri Securities Public Company Limited, as the distributor and underwriter, stated that

The highlights of the additional investment in INETREIT are:

1) The trust will invest in freehold ownership, allowing it to generate income without time limitations on investment.

2) The additional assets the trust invests in are of high quality and internationally certified, featuring new equipment that can offer higher value products and services.

3) The trust's assets are in a high-growth industry.

4) The trust has opportunities for growth from future investments in additional assets and has the right of first refusal on properties used for INET's data center operations, including the right to invest in additional rack cabinets within the INET-IDC 3 Phase 2 project.

5) INET, as the main tenant, has expertise in project management and extensive experience in the data center business.

6) The trust is managed by an experienced management team with a comprehensive network for the data center business. Additionally, investing in the trust currently presents an attractive option and a great opportunity to earn returns from dividends.

 

INETREIT has filed a registration statement for its first capital increase of up to 220 million units to invest in additional assets valued at up to 3.2 billion baht. It is currently under consideration for approval from the Securities and Exchange Commission ("SEC") to prepare for the offering of additional trust units.