Welcome again, everyone to our next Towkay Talk series!
Towkay Talk is a deep-dive into the intangibles of a company (aside from their reports and statistics) by talking to the key people behind the scenes.
The ones that run the day-to-day of the companies, and knows the ins and outs and this week, we want to do a quick spotlight on Stoneweg Europe Stapled Trust (SERT)
SERT is a European logistics and data centre platform, and invests in income-producing commercial real estate.
At the centre of this Towkay Talk is its CEO, Simon Garing, a leader whose career spans 25 years in the global real estate industry. He has previously worked for Cromwell Property Group and Bank of America.
Let’s check in to see what’s going on!
Q1: Let’s start with the macro outlook for Europe. With the ongoing conflicts between Ukraine and Russia, and in the Middle East region, what do you think of the impact of high energy prices affecting your tenants in the light industrial, logistics and office segments? In the 1Q 2026 report, it was mentioned that about 98.4% of utility cost inflation is borne mostly by your tenants through service charge mechanisms. Will this be the case for 2026 also?
SERT’s portfolio has demonstrated resilience despite geopolitical tensions and energy market volatility over the years. Based on a review of 2021–2025 portfolio operating expenses, utility costs are predominantly borne by tenants through service charge mechanisms due to the nature of leases.
As highlighted in the 1Q 2026 business update, approximately 98.4% of utility cost inflation was structurally passed through to tenants, and utility costs directly borne by SERT remain small relative to total operating expenses, which helps preserve portfolio margins even in periods of elevated energy prices. SERT expects a similar outcome in the current year.
In addition, the portfolio is diversified across multiple Western European markets with more than 700 tenant-customers, reducing concentration risks. No single tenant contributes more than 4% of SERT’s total headline rent, which provides income resilience. CPI-linked indexation across 965 leases provides net income growth from higher CPI from higher energy prices.
Q2: The company’s next growth phase lies in the AI data centre industry. And there is a target of about 15%-25% asset value exposure. Could you comment on the timing of when this could be achieved, considering the booming demand for AI computing power now? And is the company considering increasing this target if demand increases more than expected?
SWI Group holds a 28% direct stake in SERT’s stapled securities and wholly owns both the REIT Manager and the Property Manager. This alignment between sponsor, manager and securityholders ensures that strategic decisions remain closely aligned with the long-term performance and value creation objectives of SERT.
SWI Group is also one of Europe’s active hyperscale digital infrastructure developers. Through its 10-year life DC development fund AiOnX, SWI manages a 1.7 GW development pipeline across five projects in 5 different European countries, supported by committed power capacity, various stages of permitting progress and strong hyperscale customer relationships with a GDV of over EUR30billion.
The platform also includes:
Agreed acquisition of a majority ownership of Polarise GmbH, an NVIDIA preferred cloud partner providing GPU-as-a-service solutions; and
Majority ownership of a large, power secured digital infrastructure platform transitioning to AI hyperscale usage, with 635 MW already energised
This market-leading level of European DC and Digital infrastructure expertise and resources provides the SERT Board with substantial confidence in the Sponsors’ ability to execute on the asset plans.
The SERT Board’s stated target of 15–25% allocation to data centres by 2028 is expected to be predominantly achieved through a combination of:
Substantial NAV uplift from SERT’s equity stake in the Sponsor’s 1.7GW DC development fund, AiOnX, as the 5 underlying data centre projects are developed and revalued over time
Conversion into common equity at a substantial discount via SERT’s mandatory convertible loan to AiOnX
The conversion of selected SERT’s industrial assets as they are repositioned via procuring planning and power permits into higher value uses, including data centres
Potential accretive acquisitions of the DC pipeline from the Sponsor’s substantial digital ecosystem
Continued disposal of non-core/non-strategic office and other assets to recycle capital accretively.
The SERT Board reviews its investment strategy regularly, taking into account both risk and return characteristics of the portfolio to drive DPS, NAV/security and TSR growth for all securityholders.
Currently, SERT is not considering increasing the 15-25% weighting and will keep the market informed if conditions change.