The REIT will hold this GDS facility in Kunshan, China (Image: GDS)
China is about to see its first data centre REITs listed on mainland exchanges with local giant GDS Holdings set to raise RMB 2.4 billion ($335 million) from an IPO this month.
GDS this week announced the final offering price for NF GDS Data Centre Infrastructure Real Estate Investment Trust, which is expected to issue 800 million units on the Shanghai stock exchange at RMB 3.00 each. The price was determined upon completion of the institutional bookbuilding, with the retail public offering to start on 14 July.
“The launch of the GDS C-REIT as well as the listing of our hold-type real estate ABS on the Shanghai Stock Exchange have provided important tools for the company’s full-cycle financing,” said GDS chairman and CEO William Huang last week as the C-REIT’s IPO received a green light from China’s top securities regulator. “This is conducive to attracting more capital into the data centre sector and bringing strong momentum to the industry’s development.”
GDS’ C-REIT was approved by the China Securities Regulatory Commission (CSRC) last month, together with Range Technology REIT, which will list on the Shenzhen bourse, making the two vehicles the country’s first data centre REITs after previously listings of public trusts focused on infrastructure, warehouses and retail assets.
29MW in Capacity
GDS’s new trust will acquire from the company full ownership of an entity holding a data centre in Kunshan, Jiangsu province with a total enterprise value of approximately RMB 2.3 billion. The data centre operator expects to gain approximately RMB 2.11 billion from the transaction and plans to use the proceeds to settle about RMB 62 million of debt and liabilities.
William Huang, chairman and chief executive of GDS Holdings also chairs DayOne
GDS will reinvest RMB 480 million to maintain a 20 percent ownership in the C-REIT, which will become the first data centre REIT to be listed on the Shanghai bourse. Cornerstone investors include local titans China Life, Huatai Securities, Orient Securities and Galaxy Securities.
At the final offering price of RMB 3.00 per unit, the C-REIT’s projected dividend yield for 2026 is 5.2 percent, with its enterprise value representing a multiple of 16.9 times earnings before interest, tax, depreciation and amortisation (EBITDA) based on projected EBITDA of RMB 141.8 million for 2026.
Located along Kunshan’s easternmost border, where the town merges into Shanghai, GDS C-REIT’s seed property at 558 Yuanchuang Road in Huaqiao Town comprises two data centre buildings spanning 35,376 square metres (380,784 square feet). The structures house 4,192 equipment cabinets with a total capacity of 29 megawatts, according to the C-REIT’s prospectus filed with the Shanghai bourse.
Telecom operators China Unicom and China Telecom are the data centre’s major customers together accounting for about 98 percent of its revenue, with the property having been fully occupied over the past three years, according to the prospectus.
With both buildings having been in operation since 2020, the data centre recorded a net profit of RMB 47.33 million on revenues of RMB 164.4 million in 2024. Its EBITDA for 2024 was RMB 142.1 million.
After transferring the project company to the C-REIT, GDS will continue to operate and manage the data centre and will receive RMB 5 million in management fees annually, said the company.
The IPO will take one asset off GDS’s balance sheet, which included 91 self-developed data centres with 608,970 square metres of net floor area in service in China as of the end of 2024. The firm generated revenues of RMB 10.3 billion in 2024, up 5.5 percent from the prior year.
Capital Recycling
GDS’s C-REIT listing comes just a few months after the company sold some of China its server-hosting facilities into a private REIT in March netting RMB 1.2 billion ($170 million) from the transaction.
Establishing the private REIT enabled GDS to issue asset-backed securities (ABS) on the Shanghai Stock Exchange, which were 70 percent subscribed by Chinese institutional investors led by China Life, with GDS subscribing for the remaining 30 percent and retaining the operating rights for the target data centres. The ABS successfully listed in April.
GDS’s new C-REIT will potentially provide an exit channel for investors in the private REIT, with the data centre operator flagging back then an eventual injection of the ABS into a public REIT vehicle “when qualified”.
DayOne IPO Chatter
Bloomberg reported in February that GDS was considering a US initial public offering for DayOne, which operates the group’s overseas business in Hong Kong and Southeast Asia. The IPO could take place as soon as this year and raise up to $500 million, the news agency said, citing people familiar with the matter.
GDS holds a non-controlling 35.6 percent equity interest in DayOne, whose backers include US investment firms Coatue Management and Baupost Group, Masayoshi Son’s SoftBank Vision Fund and Citadel CEO Kenneth Griffin.
Analysts view DayOne’s renaming from GDS International as a move to distance the offshore arm from the China-based parent amid geopolitical risks and better position the unit for a potential public listing.
“The rebranding of GDS International to DayOne is a calculated step to present its international business as a distinct and autonomous entity which can resonate more strongly with global investors,” National University of Singapore professor and sustainable futures co-director PS Lee told Mingtiandi in February.
