Keppel Dc Reit Acquires Tokyo Data Centre 707 Million Prices Preferential Offering 224 New Unit

As part of its continued growth strategy, Keppel DC REIT, together with its sponsor Keppel, has announced the acquisition of Tokyo Data Centre 3 for 82.1 billion yen, equivalent to approximately $707 million. This freehold, brand-new hyperscale data centre is situated in Inzai City, Greater Tokyo and marks the REIT’s second data centre asset in Japan.The total purchase price reflects a discount of 1.1% to the asset’s valuation of 83 billion yen, or $714.7 million. Once the transaction is finalized, Keppel DC REIT will hold a 98.47% effective interest, with Keppel retaining the remaining 1.53%.In addition to its latest acquisition, Keppel DC REIT is actively seeking opportunities to invest in overseas properties. With numerous projects available for sale around the world, investors can explore different markets and diversify their portfolio.On a pro forma basis, assuming that the transaction was completed on January 1, 2024, distribution per unit for FY 2024 is expected to rise by 2.8% from 9.451 cents to 9.712 cents. This includes the Tokyo Data Centre 3, which is already fully leased to a leading global hyperscaler for a period of 15 years with yearly rental increase built in.Keppel DC REIT CEO Loh Hwee Long expresses the REIT’s satisfaction with this acquisition, stating that it aligns with their value creation strategy of pursuing opportunities in established data centre hubs, including hyperscale developments. Loh also highlights the strong market demand for data centres in Japan, as well as the country’s strategic location as an interconnect point between Asia and the Americas, making it a highly promising market for long-term growth. He adds that the addition of this high-quality asset to their portfolio will boost their income diversification and enhance their presence in Japan.To finance the purchase, Keppel DC REIT has launched a pro-rata, non-renounceable preferential offering to raise gross proceeds of approximately $404.5 million. Entitled unitholders will be able to purchase 80 new units at $2.24 each for every 1,000 existing units held. The funds raised will also go towards an asset enhancement initiative at Keppel DC Singapore 8, cover associated costs for a 30-year land lease extension for Keppel DC Singapore 1, as well as for debt repayment purposes.The acquisition is set to be completed by the end of the year, and once finalized, the Tokyo Data Centre 3 will increase Keppel DC REIT’s portfolio occupancy rate from 95.8% to 95.9%, and raise the weighted average lease expiry from 6.92 years to 7.2 years. This will bring the REIT’s assets under management (AUM) to $5.7 billion, comprising of 25 data centres spread across 10 countries in Asia Pacific and Europe.Keppel DC REIT units closed at $2.36, unchanged for the day, but up 6.79% year to date.

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