First Eagle Global Real Assets Fund on GDS Holdings Ltd.
Thesis
GDS owns and operates data centers in China and also holds a valuable minority interest in international hyperscale developer DayOne. Recent results were strong but fell short of expectations because of gain-to-lease realization, delays in the improvement of mainland Chinese leasing conditions and concerns around future supply. The fund believes China's domestic semiconductor industry could materially increase chip production to satisfy strong compute demand over the next several years. That could improve utilization of GDS's existing metropolitan facilities and create additional development opportunities at attractive returns on cost.
“benefiting GDS through the lease-up of existing underutilized facilities in major metropolitan markets”
Key risks
- Delayed realization of the improved data-center leasing environment in mainland China.
- Concerns about future data-center supply.