Telstra (ASX:TLS) announces $417 million asset sale

Telstra (ASX: TLS) has announced a $417 million asset sale of its Clayton data centre to Centuria Industrial REIT (ASX: CIP).

Telstra is Australia’s biggest telco company and Centuria industrial REIT is a property business that owns 48 industrial buildings like warehouses.

Telstra’s big asset sale

Telstra has announced the sale of its data centre complex in Clayton (Victoria) for $416.7 million.

The site is 25km from the Melbourne CBD and it includes 10 buildings including Telstra’s newest 6.1MW data centre and the nearby 6.6MW data centre and the linked energy centre.

The sale includes a triple-net lease-back arrangement which means Telstra will retain ownership of all the IT and telco equipment as well as ongoing operations and responsibility for building upgrades and repairs, future capital expenditure and security.

Telstra’s lease is for an initial period of 30 years with two 10-year options to extend the lease.

Telstra CEO Andrew Penn said the sale was part of the company’s ‘T22’ long term strategy:

As part of T22, we have an ambition to monetise up to $2 billion worth of assets to strengthen our balance sheet. This deal means we have no reached over $1.5 billion. Data centres are an incredibly important part of the digital ecosystem and we continue to own and operate world-leading facilities in Australia and overseas.”

Summary

This seems like a good move for both businesses involved. Owning the building doesn’t seem necessary for Telstra, so it can redeploy that capital somewhere else. It’s a good sale price with interest rates being so low.

For Centuria Industrial REIT, it gets a great asset with a long term quality tenant. It’s planning to do a capital raising to fund the deal.

However, I’m not sure I’d buy either of them for my portfolio. I’d rather go for other ASX dividend shares with better growth prospects including WHSP (ASX: SOL) which has plans to build regional data centres.

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At the time of publishing, Jaz owns shares of WHSP.

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