Barcelona Synchrotron Park Where to Invest in Data Centres in Southern Europe

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1 Barcelona Synchrotron Park Where to Invest in Data Centres in Southern Europe

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3 Barcelona DC A mission critical comprehensive infrastructure for data centres An investment opportunity in Southern Europe Barcelona Synchrotron Park (BSP) is looking for investors interested in building, commercialising and managing a mission critical comprehensive infrastructure for data centres at a site in Barcelona known as DC. This is a specially designed 67,200 m2 of gross floor area (723,000 ft2, 16.6 acres) at BSP, with a 42 MW power supply available. This unique infrastructure would give companies interested in building a data centre the following competitive advantages: Reduced operating costs thanks to outsourced management of support infrastructures and high energy efficiency TIER III certified critical support infrastructures Reduced implementation time (Time to Market) Reduced financial risks thanks to minimisation of investment and divestment costs Maximisation of IT sales floor area and power density High modularity and scalability Strategic geographic location The business plan to build, commercialise and manage the infrastructure is based on an investment of 77.4 million euros, and an expected Internal Rate of Return of 13% without financial leverage. Barcelona Synchrotron Park Page 3

4 Location Barcelona/Catalonia fdi Intelligence Magazine rates Catalonia the best Southern European Region for attracting Foreign Direct Investments (FDI), according to its last 2018/19 ranking. In 2016, Catalonia attracted 5.05 billion euros in FDI. Data centres in Barcelona In Barcelona and its metropolitan area, data centres are mainly concentrated in three areas: Barcelona Synchrotron Park, and Barcelona. At these date centres, important companies from the sector, such as T-Systems, IBM, HP, Orange, Colt or AT&T, have already made big investments. Barcelona Synchrotron Park Page 4

5 DC Ap-7 C-58 Ap-7 A-2 C-16 C-16 Barcelona Synchrotron Park BSP has direct and immediate access to the European Route E-15 (AP7), connectwo examples of travel times: ting the south of Spain with the north of Great BSP Down town Barcelona Britain, via Paris and Lon30 minutes don. BSP Barcelona Int. Airport 35 minutes The E-15 links up with the main roads leading into the north of Barcelona and the city centre. BSP has reserved 640,000 m2 of land for innovative companies from across the globe to set up operations around the ALBA synchrotron, the most important scientific facility in southwest Europe. BSP offers top-of-the-line infrastructures: a polygeneration power plant with a heating and cooling network right by each plot, permitting a 35% reduction in CO2 emissions; seven telecommunications operators with their own optical fibre networks; several data centres, etc. Alba Synchrotron Barcelona Synchrotron Park Page 5

6 DC However, it is the surrounding area that is the park s prime value: A stage for research and training with the neighbouring Autonomous University of Barcelona (UAB), one of the best universities in Spain (43,000 students, 3,500 researchers, 27 research centres); and ESADE, one of the top business schools in Europe. A stage for innovation with the technology centre EURECAT (part of Vallès Technology Park), business incubators at the UAB Research Park (PRUAB) or ESADE Creapolis, etc. A stage for business with 10,000 companies within a radius of a few kilometres of the synchrotron. A stage for quality of life with 53% greenbelt and a policy for biodiversity conservation. Data centres at BSP Among the 7 companies currently located at BSP, 3 are data centres: IBM, T-Systems and Silc Immobles. These companies have invested 217 million euros in BSP, corresponding to a total of 24,000 m2 of gross floor area. The company Adam also has a data centre on the boundary of the park. Silc Immobles Barcelona DC Silc Immobles Barcelona Synchrotron Park Page 6

7 An ideal setting for data centres: 7 telecom operators with their own infrastructures Redundant access points 220/25 kv electrical substation (42MW committed to the ) Direct and immediate access to motorway Fire station at 3 km and police station at 1.5 km No flood risk and low seismicity area (PHA: 0.04g) Low air pollution and cool climate conditions Free cooling up to 86% of time Barcelona DC By building its own data centre, a company gains control over all its operations; however, the investment involved in the design, construction and management is very high. On the other hand, colocation is an appealing financial option, but it does mean sacrificing operating control. Barcelona DC cluster provides an alternative solution to the ownership/colocation dilemma: it offers a shared-basis mission critical comprehensive infrastructure where each owner keeps full control over its DC space, taking advantage at the same time of an outsourced, Tier III certified, power and cooling infrastructure. This solution allows companies to drastically reduce investment expenditure and focus all their efforts on their core business. This unique solution is particularly attractive for companies managing large amounts of data, requiring high levels of availability and security, and looking to access a data centre quickly without the financial or technological capacity to design, build and manage a conventional one. Barcelona DC offers a comprehensive mission critical infrastructure for data centres with unique services: Leasing of urban land TIER III subcontracting of electricity and cooling Neutral access to multiple ISP Subcontracted general services (access, security, maintenance) This unique infrastructure would give companies interested in building a data centre competitive advantages in terms of reduced operating costs, certified critical support infrastructures, time to market and reduced financial risks. It would also ensure a maximisation of IT sales floor area and power density, a high modularity and scalability in addition to a strategic geographic location. Barcelona Synchrotron Park Page 7

8 DC Land The Barcelona DC will be built on a 42,000 m2 plot (67,200 m2 of allowable gross floor area, 723,000 ft2, 16.6 acres) specially designed for data centres. The plot will host several data centres and a trigeneration power station (see below). It can be flexibly divided into sub-plots with sizes adapted to the needs of each company. The following detailed business plan is based on a total of 14 sub-plots (trigeneration power station and 13 data centres) from 2,300 to 4,350 m2. Barcelona Synchrotron Park Page 8

9 Trigeneration power station The outsourced electrical and cooling power supply will be provided by a 42 MW trigeneration power station, operating with natural gas, and built on the same plot. The power station will also be connected to the electrical grid via a 220/25kV electrical substation, located in BSP. It goes without saying that the polygeneration power station will have DRUPS (Diesel Rotary Uninterruptible Power Supply Systems) and compression chillers to meet the requirements of the TIER III certification. BSP has acquired extensive experience in this area. With the goal of reducing the environmental impact of its urban development, BSP has designed and built a centralised heating and cooling system based on a trigeneration power station that simultaneously produces electricity for the synchrotron, and cold/hot water distributed throughout the park. This setup makes it possible to reduce primary energy consumption and CO2 emissions by 35% in comparison with a park where each company produces its own heating and cooling with conventional air-conditioning systems. Barcelona Synchrotron Park Page 9

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11 Business plan This section contains the main results in the business plan. For more details, please contact us.

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13 1. Positioning Based on a market study, Barcelona DC is especially well-positioned internationally in the sectors: telecommunications, colocation and corporate; and regionally in the sectors: public administration, industry, retail, research, cloud, emerging technology, and banking. 3. Operation and launch In terms of operations, Barcelona DC will require a maximum of 20 staff spread across 3 departments (Operations, Marketing and General Services), which will oversee the company s various processes. It is expected that the lead time (from the creation of the company) until starting activities will be two years, including registrations and obtaining licenses, writing up different projects, construction work, start-up, and obtaining certifications. 5. Economic and financial plan As previously mentioned, an accumulated turnover of 326,000,000 for the first 11 years is expected. To achieve this turnover, an investment of almost 77,400,000 is required, of which 61,500,000 will be destined to building the 42 MW trigeneration power station. 2. Income prediction In a moderate sales scenario (93% occupation of the total 67,000 m2 of allowable gross floor area in 11 years), the accumulated income would be 362 million euros. This income has been calculated based on monthly yields, and it accounts for the electricity and cooling supply, as well as the leasing of the plot, including the plot itself, general services (access, security and maintenance) and common areas. 4. Legal aspects As there are no initial limitations to capital contributions, Barcelona DC will be established as a Public Limited Company (or S.A. in Spain). However, the statutes will contain a restriction on transfers between partners to protect the s customers from possible sales of the company. It is not necessary to list the company at the register of electricity marketers, as this is only part of the service (space, security, thermal energy, maintenance, etc.) provided to users. A board of directors will be created, made up of the operating company (with participation from the general director and three department directors) and a representative from each customer of the. This body will coordinate the operation of Barcelona DC. Barcelona Synchrotron Park Page 13

14 60000 Plot Sale Scenario Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Moderate Optimistic Pessimistic This investment will have four stages (in accordance with the expected growth of the ). Investment ( ) Year 0 39,787,066 Year 3 11,944,725 Year 6 13,126,774 Year 10 12,536,739 Total 77,395,304 Obviously, the financing plan depends on the investment strategy. Two investment scenarios are analysed in the following two sub-paragraphs: an investment with financial leverage ( 5.1) or without it ( 5.2). Barcelona Synchrotron Park Page 14

15 5.1 Results for the investment with financial leverage The proposed financial leverage is: 77.4m loan (requested in four instalments, one for each scheduled investment) with a 30-year repayment period. The annual interest is calculated at 5.4%, which amounts to a financing cost of 69.7m. The instalments will become available at the beginning of each investment period, shown in the last table. Share capital contributions of 15m in year 0. This will cover the VAT of the initial investment, and a 1 to 4 proportion between contributed capital and external financing will be maintained. The evolution of EBIDTA shows strong growth in the first few years, with a tendency to stabilise from year EBITDA Year Year Year Year Barcelona Synchrotron Park Page 15

16 The net result follows a similar evolution. After-tax Results Regarding economic and financial profitability, the profitability of the project relative to its total assets (i.e. Return on Assets) will increase steadily during the first years of the project, exceeding the relative cost of debt by the end of year 4, as shown in the figure below. ROA Barcelona Synchrotron Park Page 16

17 The fact that the profitability exceeds the cost of debt during most of the expected life of the project, justifies to increase external financing (i.e. borrowing) in year 3, 6 and 10, instead of using equity. As a result of this financial leverage, the shareholders profitability (i.e. Return on Equity) will be increased considerably: ROE The leverage will allow for a good financial performance, while also obtaining rapid growth of the net present value, which will be maximised at the end of the period, permitting a fast return on investment before 6 years. Net Present Value Finally, after 30 years (a timeframe for which it is anticipated the surrounding conditions will be maintained) the profitability figures of the investment, in a leverage scenario, are: Barcelona Synchrotron Park Page 17

18 Internal Return Rate (IRR) 28.38% Net Present Value (K=5%) 102,297, Results for investment without financial leverage For evaluating the project s performance without leverage, a financing scenario only using equity has also been considered. In this case, the capital contributions must adhere to the same guide, falling mostly in year zero, and no longer being necessary from the third year onwards: Capital Injection ( ) Year 0 51,076,215 Year 3 4,944,725 Year 6 0 Year 10 0 Total 56,020,939 As there would be no financial burdens, the after-tax results could quickly become positive, generating a very good cash flow. Barcelona Synchrotron Park Page 18

19 After-tax Results Without leverage, the investment performance would be limited to the assets, hence, it would reflect the project s net performance. In this case, the evolution of the present net value would be slower, obtaining a return on investment after 12 years, and growing almost linearly from that point onwards. Barcelona Synchrotron Park Page 19

20 Net Present Value Finally, after 30 years the profitability figures would be: Barcelona Synchrotron Park Page 20

21 Internal Return Rate (IRR) 13.02% Net Present Value (K=5%) 99,330, Conclusion Barcelona DC, a new paradigm for managing mission critical infrastructures, makes it possible to achieve sound financial performance thanks to its comprehensive offer of high flexibility and modularity, quick deployment, competitive energy prices, and common services, all of which are results-driven and guaranteed. Under realistic conditions, the estimated net present value and IRR prove to be significantly attractive for long focused investors, adjusting the risk and obtaining a good asset return, which could be boosted up to 30% through leverage. Barcelona Synchrotron Park Page 21

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23 contact: Carlos Dapena