Keppel Dc Reit Acquires Tokyo Data Centre 707 Million Prices Preferential Offering 224 New Unit
Keppel DC REIT and its parent company Keppel recently announced their acquisition of Tokyo Data Centre 3 for 82.1 billion yen, or approximately $707 million. This newly-built hyperscale data centre, located in Inzai City, Greater Tokyo, will be the REIT’s second data centre asset in Japan.
The purchase price represents a discount of 1.1% to the asset’s valuation of 83 billion yen, or $714.7 million. Upon completion of the deal, Keppel DC REIT will hold a 98.47% stake in the asset, with Keppel retaining 1.53%.
On a pro forma basis, if the acquisition had been completed on January 1, 2024, distribution per unit for FY 2024 would increase by 2.8% from 9.451 cents to 9.712 cents. The Tokyo Data Centre 3 is currently fully contracted to a leading global hyperscaler for a 15-year period, with built-in annual rent escalation.
Loh Hwee Long, CEO of Keppel DC REIT’s manager, states that the acquisition of Tokyo Data Centre 3 is in line with the REIT’s value creation strategy to pursue opportunities in established data centre hubs. He adds, “Japan’s favorable demand-supply dynamics for data centres and its strategic location as an interconnect hub between Asia and the Americas make it a compelling market for long-term growth. We are excited to expand our presence in Japan with another high-quality asset that will enhance our portfolio and strengthen our income diversification.”
To fund the acquisition, Keppel DC REIT has launched a pro rata non-renounceable preferential offering to raise gross proceeds of approximately $404.5 million. This offering is open to entitled unitholders of Keppel DC REIT, who will be offered 80 new units at $2.24 each for every 1,000 existing units held. The proceeds will also go towards an asset enhancement initiative at Keppel DC Singapore 8, associated costs for a 30-year land lease extension for Keppel DC Singapore 1, and debt repayment.
The acquisition is expected to be completed by the end of the year and will improve Keppel DC REIT’s portfolio occupancy from 95.8% to 95.9%, with a weighted average lease expiry of 7.2 years. The REIT’s assets under management will reach $5.7 billion, consisting of 25 data centres across 10 countries in Asia Pacific and Europe. As of now, Keppel DC REIT units are priced at $2.36, remaining unchanged for the day and up 6.79% year-to-date.
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