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Data Center InvestmentsChallenges and Opportunities            Martin Paev, CFA               Chairman             SORTIS ...
About SORTIS GROUP   Investment Banking     Real Estate Investment        Credit and Leasing        Boutique         Manag...
Data Sentry Sofia 1 ProjectScalable data centerca. 7,000 sq.m. white space6 floors of white spaceTier 3 (TIA-942) or L...
Data Sentry Sofia 1 Location A growing business district in the area of Sofia Airport Next to Air Traffic Service Author...
Why Bulgaria?Security?      EU Member state               NATO Member stateStability?     Stable political environment ...
Do Power Savings Matter?                                                                             Source: Europe’s Ener...
Opportunity Significant investor interest Growing market Stable customer base    Low churn rates – recurring revenues ...
Growing market As Internet traffic grows exponentially, demand for data center  space is expected to keep increasing     ...
Data Center Returns                      9
Challenges Capital intensive    Phased build-outs – “Pay as you grow” Long development cycle    Clients require short ...
Valuation EBITDA multiples  easiest to comprehend Free Cash Flow (EBITDA – Capex)  more appropriate for data centers RO...
CONTACTSMr. Martin Paev, CFAChairmanE-mail: paev@sortis.bgCell: +359 88 50 50 200www.sortis.bg                            ...
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Sortis Data Center Investments Broad Group Conference Budapest 20110217

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Sortis Data Center Investments Broad Group Conference Budapest 20110217

  1. 1. Data Center InvestmentsChallenges and Opportunities Martin Paev, CFA Chairman SORTIS GROUP Budapest 17-18 February 2011 Data Centres Central & Eastern Europe 2011
  2. 2. About SORTIS GROUP Investment Banking Real Estate Investment Credit and Leasing Boutique Management Company Advisory CompanyFinancial advisory Sources and structures Advisory services toservices to companies individual and collective companies andand fund managers: investment schemes: individuals: Private equity and  RE investment advisory  Mortgage loans venture capital  RE portfolio  Investment loans Corporate finance management  Consumer loans Mergers and  Property fund  Leasing acquisitions management Partnership agreements Fundraising for fund  Mezzanine RE with the leading banks, managers financing non-banking and leasing Active in all major real financial institutions in estate sectors Bulgaria 2
  3. 3. Data Sentry Sofia 1 ProjectScalable data centerca. 7,000 sq.m. white space6 floors of white spaceTier 3 (TIA-942) or Level 3+ (IBM)14 MW fully redundant power supplyGeneral IT load – 4 kW/rackHigh-density areas (20+ kW/rack)Targeted PUE < 1.3 3
  4. 4. Data Sentry Sofia 1 Location A growing business district in the area of Sofia Airport Next to Air Traffic Service Authority, hosting its own Data Centre Site complies with TIA-942 standards 4
  5. 5. Why Bulgaria?Security?  EU Member state  NATO Member stateStability?  Stable political environment  Currency pegged to the EURO since 1997  Low budget deficit  Low level of government debtCosts?  Electricity – 41% cheaper than EU average  Leading exporter of electricity for SEE region  Cheap and fast international connectivity  Lowest construction costs in the EU  Skilled low-cost IT laborTaxation?  10% corporate profit tax – lowest in EU  10% flat personal income taxIncentives?  Government incentive schemes  EU grant funding availableClients?  Offices of blue-chip IT companies 5
  6. 6. Do Power Savings Matter? Source: Europe’s Energy Portal Then Bulgaria is your place !!!Data Sentry Sofia 1 - Potential Annual Power SavingsPower Consumption (MW) 14Number of hours in Year 8 760City Sofia Frankfurt/Main Paris London Amsterdam MadridCountry Bulgaria Germany France UK Netherlands SpainElectricity Price (EUR/MW, excl. VAT) 45 132 67 113 99 84Electricity bill (EUR, excl. VAT) 5 518 800 16 188 480 8 216 880 13 858 320 12 141 360 10 301 760Annual Savings (EUR) 10 669 680 2 698 080 8 339 520 6 622 560 4 782 960 6
  7. 7. Opportunity Significant investor interest Growing market Stable customer base  Low churn rates – recurring revenues ca. 95% Profitability  high EBITDA margins – 25% to 35%  high IRRs >30% High barriers to entry 7
  8. 8. Growing market As Internet traffic grows exponentially, demand for data center space is expected to keep increasing Source: Euro-IX 8
  9. 9. Data Center Returns 9
  10. 10. Challenges Capital intensive  Phased build-outs – “Pay as you grow” Long development cycle  Clients require short time to market Difficult to time it right  Operators have to predict future demand Need pre-lets to get project financing  Chicken and the egg problem Business model changes  Blade servers => high density  Virtualisation  Cloud Older data centers need upgrade  Retrofitting 10
  11. 11. Valuation EBITDA multiples easiest to comprehend Free Cash Flow (EBITDA – Capex) more appropriate for data centers ROTNOA (Return on Tangible Net Operating Assets) shows how well the company utilizes its assets ROTNOA is more favorable for companies that emphasize on managed hosting and cloud services 11
  12. 12. CONTACTSMr. Martin Paev, CFAChairmanE-mail: paev@sortis.bgCell: +359 88 50 50 200www.sortis.bg 12

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