Cromwell Property Group has provided an update on its paused $1 billion data center fund, saying it was ‘unable to commit’, but has walked back on the acting CEO's comment that it had trouble sourcing renewable power for proposed sites.
The Brisbane-based fund manager launched a fund with UK-based Stratus Data Centres last year with the goal of expanding into sites in Europe and APAC, but reportedly paused the fund in February. The Australian Financial Review said the fund was being parked after efforts to secure renewable energy were frustrated, with acting chief executive Michael Wilde telling the Review at the time that the original structure it was investigating was “not going to meet our requirements”.
Cromwell has now provided an update, saying though it is no longer pursuing the fund it wasn’t because of power-sourcing issues at the proposed Stratus facilities.
Power issue was an “illustrative example” of data center complexities
“Cromwell confirms that it did examine the proposal in the last quarter of 2020 but was unable to commit to the project at that time,” the update reads. The fund adds that Stratus and its partners have “continued to progress with the initiative.”
“We still believe the thematic behind the asset class will stand the test of time,” said acting Cromwell CEO Michael Wilde. “We have no doubt the Stratus team and their partners will be successful and we wish them well with their plans.”
In its update Cromwell notes the power issue was made as an “illustrative example to highlight how complex the various moving parts to any agreement are.”
“It was not intended to imply the proposal didn’t proceed due to any failure to secure power (or any other operational issue) with respect to Stratus data centre projects.”
The fund had two sites earmarked as “seed properties” – a data center in London, UK, and a campus in Frankfurt, Germany with a combined capacity of around 400MW and both being developed by Stratus. Stratus Chairman Eric Solberg added that he “appreciated” Cromwell’s clarification about the status of the sites.
“We remain in close contact with our friends at Cromwell and remain open to partnering or otherwise pursuing projects together in the near future,” he said.
Cromwell’s movement into the data center space caused upset with some shareholders last year, partly due to its lack of previous involvement in the space.
“ARA is appalled to discover that Cromwell has recently committed to allocate significant security-holder funds to invest in data centers, a sector in which Cromwell has no expertise,” a spokesperson for ARA Asset Management said during a hostile takeover bid in an attempt to place an ARA representative on the Cromwell board.
