Keppel DC Reit, Keppel Acquire Tokyo Data Centres for US$1.1 Billion
Keppel DC Reit and Keppel will acquire 90 per cent stakes in two Tokyo data centres for US$1.1 billion. The Reit manager also plans a S$600 million private placement.
Major Tokyo Acquisition
Keppel DC Reit and Keppel have agreed to acquire 90 per cent stakes in two Tokyo data centres for 171 billion yen (US$1.1 billion). These freehold, hyperscale co-location facilities are in Inzai City, Greater Tokyo. The acquisition is set to complete in the fourth quarter of 2026. Keppel DC Reit will hold an 88.62 per cent effective interest in each asset.
Keppel, through its interest in Keppel Japan KK, will hold 1.38 per cent. An existing operator retains the remaining 10 per cent interest.
Equity Raising and Financial Impact
To fund the acquisition, Keppel DC Reit's manager plans a private placement on September 10, aiming to raise at least S$600 million. It will issue 280.1 million new units at S$2.096 to S$2.142 apiece. This represents a 2.5 per cent to 4.6 per cent discount to Monday’s volume-weighted average price.
The manager also intends to declare an advanced distribution of distributable income. This distribution, for July 10 to September 9, is estimated at S$0.02241 to S$0.02281 per unit. The manager expects the acquisition to be immediately accretive to distribution per unit (DPU).
Portfolio Diversification
The acquisition expands Keppel DC Reit’s assets under management (AUM) from S$6.3 billion to S$7.6 billion. Its portfolio will now span 27 data centres across 10 countries. Japan's contribution to portfolio rental income will increase from 9 per cent as at June 30 to 23 per cent post-acquisition. The new assets are fully occupied by four investment-grade clients.
Three of these clients are new to Keppel DC Reit’s portfolio. This broadens the client base and reduces client concentration risk. The top client’s contribution to rental income will fall from 43.5 per cent to 38.2 per cent.
The Tokyo data centres offer embedded growth, according to Keppel DC Reit’s manager. They feature contracted annual rent escalations of about 2.8 per cent. In-place rents are estimated at least 30 per cent below prevailing market rates, suggesting future reversion opportunities.
The portfolio’s weighted average lease expiry (WALE) by lettable area will extend from 6.7 to 6.8 years. Singapore will remain the portfolio’s primary income anchor, accounting for about 60 per cent of rental income. Investors will monitor the private placement's uptake and the impact of increased Japan exposure on future earnings.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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