Keppel Dc Reit Acquires Tokyo Data Centre 707 Million Prices Preferential Offering 224 New Unit
Keppel DC REIT, together with its sponsor Keppel, have jointly announced the acquisition of the Tokyo Data Centre 3 for 82.1 billion yen, equivalent to approximately $707 million. Situated in Inzai City, Greater Tokyo, this brand-new hyperscale data centre is being purchased by the REIT as its second data centre asset in Japan. The total purchase amount represents a discount of 1.1% to the asset’s valuation, which is estimated at 83 billion yen, or $714.7 million.
Upon completion of the transaction, Keppel DC REIT will hold a 98.47% effective interest in the data centre, while Keppel will have the remaining 1.53%. Interested in investing in overseas properties? Take a look at the available projects around the world.
On a pro forma basis, if the deal were to be completed on January 1, 2024, the distribution per unit for FY2024 is expected to increase by 2.8%, from 9.451 cents to 9.712 cents. According to Keppel DC REIT, the Tokyo Data Centre 3 has already been fully contracted for a period of 15 years to a leading global hyperscaler, with built-in annual rent escalation.
“The addition of the Tokyo Data Centre 3 is in line with our strategy to pursue opportunities in the hyperscale segment within established data centre hubs,” says Loh Hwee Long, CEO of the manager. “With the favourable demand-supply dynamics for data centres in Japan and its strategic location as an interconnect point between Asia and the Americas, it is an attractive market for long-term growth.”
Loh adds, “We are delighted to further strengthen our presence in Japan with this high-quality asset that will enhance our portfolio and diversify our income sources.”
To fund the acquisition, Keppel DC REIT has introduced a pro-rata non-renounceable preferential offering, with the aim of raising gross proceeds of around $404.5 million. Read also: Oxley narrows losses in FY2025; shifts focus solely to property development.
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Entitled unitholders of Keppel DC REIT will be given the opportunity to purchase 80 new units at $2.24 each for every 1,000 existing units held. In addition to the Tokyo data centre, the proceeds will also be allocated for an asset enhancement initiative at Keppel DC Singapore 8, associated expenses for a 30-year land lease extension for Keppel DC Singapore 1, and debt repayment purposes.
The acquisition is expected to be finalized by the end of this year and will increase Keppel DC REIT’s portfolio occupancy from 95.8% to 95.9%, as well as lengthening the weighted average lease expiry from 6.92 years to 7.2 years. The REIT’s total assets under management (AUM) will also increase to $5.7 billion, with a portfolio of 25 data centres across 10 countries in Asia Pacific and Europe.
On the Singapore Exchange, Keppel DC REIT units closed unchanged at $2.36, with a year-to-date increase of 6.79%. RELATED NEWS: Keppel DC REIT sells Sydney data centre for $152m, Keppel DC REIT acquires third data centre in the Netherlands, Economic headwinds may moderate industrial rents in 2020.