Keppel DC Reit and Keppel take 90% stakes in two Japan hyperscale data centres
Keppel DC Reit said the acquisition will boost its distribution per unit instantly while also offering numerous avenues of long-term revenue growth. The properties benefit from contracted average annual rent escalation of concerning 2.8%, and the in-place rental fees are estimated to be at least 30% listed below prevailing market rents.
The weighted average lease expiration is roughly 4.5 years for Tokyo Data Centre 4 and 10.6 years for Tokyo Data Centre 5.
With the acquisition, Japan’s contribution to the Reit’s profile leasing income enhances to about 23%, from 9% as at end-June this year.
Keppel DC Reit and Keppel are collectively acquiring 90% efficient rate of interests in 2 freehold, hyperscale data centres– Tokyo Data Centre 4 and Tokyo Data Centre 5– in Greater Tokyo.
Three of the four investment-grade customers across both Tokyo data centres are new to the Reit’s portfolio, that widens its client base and decreases client concentration risk.
Its manager intends to finance the acquisition with a mix of equity and yen-denominated debt. The deal is expected to be completed in the fourth quarter of this year.
The complete purchase cost on a 100% basis is JPY190 billion ($1.55 billion), which is at a 2.1% discount to the assets’ assessment of JPY194 billion, stated the Reit manager in a Sept 1 bourse filing.
Keppel DC Reit will therefore pay regarding JPY168.4 billion for its efficient interest in both data centres.
Positioned in Inzai City, one of Japan’s many established hyperscale data-centre clusters, the two fully fitted, colocation assets are totally inhabited by four investment-grade internet enterprise and IT companies clients.
Loh Hwee Long, CEO of the executive of Keppel DC Reit, claimed this broadens its network of institutional and functional partners, and strengthens its capability to source and access future investment opportunities globally.
Meanwhile, the existing operator will keep a 10% risk in each asset, to ensure “alignment of interests and operational continuity”, the bourse filing mentioned.
The Reit will take an 88.62% claim in each data centre, while Keppel, with its interest in Keppel Japan KK, are going to hold a 1.38% efficient interest.
