Keppel Divest Genting Lane Data Centres Kdc Reit 138 Bil
ahead of the Jan 29 sales launchKeppel Corporation to be taken private as Temasek Holdings increases its stake Keppel to divest data centre joint venture to Keppel DC REIT for $1.38 bil
On November 19, Keppel announced that it will be selling its data centre joint venture (JV) to its real estate investment trust, Keppel DC REIT (KDC REIT) for a total of $1.38 billion.
The JV, which is mostly owned by Keppel’s connectivity division (60%) and 40% owned by Cuscaden Peak Investments Private Limited, owns the Keppel Data Centre Campus at Genting Lane in Singapore. The campus consists of two completed and fully contracted data centres – Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8). These data centres are fully contracted to global hyperscalers from various industries including cloud services, internet enterprise, and telecommunications, on a colocation basis.
The construction of KDC SGP 7 and KDC SGP 8 was funded by the JV, Keppel’s private fund – Alpha Data Centre Fund (ADCF), as well as co-investors.
After the transaction is completed, KDC REIT will fully own KDC SGP 7 and KDC SGP 8. Keppel will remain the operator and facility manager for the two data centres.
KDC REIT will acquire an initial 49% interest in the JV and subscribe to two new classes of securities issued by Keppel JV for up to $1.03 billion. This will give the REIT a 99.49% economic interest from both data centres. KDC REIT will also have a call option, which it expects to exercise in the second half of 2025, to acquire the remaining 51% stake in the Keppel JV from Keppel. The remaining stake has an economic interest of 0.51% in the data centres.
As part of the transaction, KDC REIT will pay an extra $350 million to ADCF and co-investors if the campus receives approval to extend its land tenure lease to 2050.
The purchase by KDC REIT is expected to be accretive to its distribution per unit (DPU) by 8.1%. This will also increase the REIT’s assets under management (AUM) by 36% to $5.2 billion and add 25 data centres across Asia Pacific and Europe to its portfolio.
Keppel’s share of the divestment will be approximately $280 million. The gross divestment price includes the estimated consideration for Keppel’s 51% stake in the JV if the call option is exercised. It also includes the additional consideration to be paid if the campus is granted a 10-year land tenure lease extension, assuming the call option is exercised. The gross divestment price will be adjusted for debt repayment and completion adjustments.
The JV also has a vacant land plot that is reserved for a third data centre, which is not part of the transaction. The plot will be sub-leased to Keppel’s private funds, Keppel DC Fund II and the upcoming Keppel DC Fund III. Keppel plans to develop the third data centre on the campus, KDC SGP 9, with its two data centre private funds.
“The injection of KDC SGP 7 and KDC SGP 8 into Keppel DC REIT underlines our strengths as a global asset manager and operator to structure deals with attractive outcomes and strong value creation for the company, our private funds and REIT,” says Manjot Singh Mann, CEO of Keppel’s connectivity division.
“Our integrated ecosystem provides access to power and other essential resources, technology know-how, and strong customer relationships with hyperscalers worldwide, which are crucial for success in the data centre business. With the ability to invest with multiple pools of capital, Keppel can develop a robust pipeline of AI-ready data centres that offer effective solutions for customers and attractive investments for our funds and REIT,” he adds.
Loh Hwee Long, CEO of KDC REIT’s manager, says the REIT is “excited” to take on this “landmark deal” during its 10th anniversary. The REIT first launched its initial public offering (IPO) in 2014.
“The proposed acquisition will deliver strong positive cash flows and be immediately DPU accretive. These assets will not only enhance our portfolio’s income resilience but also allow us to capture potential upside from rental uplifts and capacity expansion. Their inclusion further solidifies Keppel DC REIT’s position in the market as one of the largest owners of stabilized data centers in Singapore, where there is high demand and low supply,” he adds.
The upcoming Tampines North Hub is set to offer an array of retail, dining, and community amenities to the area. This will perfectly complement the already established integrated retail podium at Parktown Residence, providing residents with an even more fulfilling lifestyle. With the hub’s proximity to popular shopping destinations such as Tampines Mall, Century Square, and Tampines 1, residents will have access to a diverse and convenient shopping experience. Plus, with the Parktown Residence Condo located just around the corner, everything residents need will be easily within reach.
The proposed transaction will happen in stages and is expected to be completed by the end of 2025.