1. Data Center Investments
Challenges and Opportunities
Martin Paev, CFA
Chairman
SORTIS GROUP
Budapest
17-18 February 2011
Data Centres Central & Eastern Europe 2011

2. About SORTIS GROUP
Investment Banking Real Estate Investment Credit and Leasing
Boutique Management Company Advisory Company
Financial advisory Sources and structures Advisory services to
services to companies individual and collective companies and
and 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
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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
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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
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5. Why Bulgaria?
Security?  EU Member state
 NATO Member state
Stability?  Stable political environment
 Currency pegged to the EURO since 1997
 Low budget deficit
 Low level of government debt
Costs?  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 labor
Taxation?  10% corporate profit tax – lowest in EU
 10% flat personal income tax
Incentives?  Government incentive schemes
 EU grant funding available
Clients?  Offices of blue-chip IT companies
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6. Do Power Savings Matter?
Source: Europe’s Energy Portal
Then Bulgaria is your place !!!
Data Sentry Sofia 1 - Potential Annual Power Savings
Power Consumption (MW) 14
Number of hours in Year 8 760
City Sofia Frankfurt/Main Paris London Amsterdam Madrid
Country Bulgaria Germany France UK Netherlands Spain
Electricity Price (EUR/MW, excl. VAT) 45 132 67 113 99 84
Electricity bill (EUR, excl. VAT) 5 518 800 16 188 480 8 216 880 13 858 320 12 141 360 10 301 760
Annual Savings (EUR) 10 669 680 2 698 080 8 339 520 6 622 560 4 782 960
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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
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8. Growing market
 As Internet traffic grows exponentially, demand for data center
space is expected to keep increasing
Source: Euro-IX
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9. Data Center Returns
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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
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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
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12. CONTACTS
Mr. Martin Paev, CFA
Chairman
E-mail: paev@sortis.bg
Cell: +359 88 50 50 200
www.sortis.bg
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