This is part of the sale of two hyperscale data centres in the campus to Keppel DC Reit

 

[SINGAPORE] Authorities have granted a conditional 10-year lease extension, to Jul 15, 2050, for Keppel Data Centre Campus, which is owned by a Keppel-led joint venture (JV), said Keppel and Keppel DC Reit on Friday (Dec 26).

 

This is part of a deal announced in November 2024 for the real estate investment trust (Reit) to acquire two artificial intelligence (AI)-ready hyperscale data centres from the JV. 

 

Under the deal, Keppel DC Reit will pay the JV &ndash a collaboration between Keppel&rsquo s connectivity division and Cuscaden Peak Investments &ndash S$350 million upon approval of the lease extension. This sum is part of the total sale figure of about S$1.4 billion.

 

Based on Keppel&rsquo s effective stake in the JV, its share of the S$350 million will be around S$70.9 million. Keppel&rsquo s stake includes its direct interests in the JV and its indirect interests via the Alpha Data Centre Fund. 

 

Loh Hwee Long, chief executive of the manager of Keppel DC Reit, said that the additional decade of tenure positions the Reit to capture the growing demand of Singapore&rsquo s data centre market. 

 

&ldquo This extension, coupled with targeted asset enhancement initiatives (AEI), will reinforce portfolio resilience and unlock growth opportunities, strengthening our ability to deliver sustainable returns,&rdquo Loh said. 

 

The decade-long extension provides &ldquo a further runway and flexibility&rdquo for Keppel DC Reit to execute AEIs, including fit-outs of unutilised space into data halls for Keppel DC Singapore 8, said Keppel and the manager of Keppel DC Reit.

 

They added that such initiatives are expected to drive revenue and valuation uplift benefits due to the extended land tenure, amplifying returns on investment. 

 

The extended tenure also helps with client retention and contributes to a resilient portfolio and a consistent stream of high-quality cash flows, they said.

 

The lease extension and the acquisition of the remaining interests in Keppel DC Singapore 3 and Keppel DC Singapore 4 announced earlier in December, will increase the assets under management in Keppel DC Reit&rsquo s portfolio by around 8.5 per cent to S$6.2 billion, from S$5.7 billion. 

 

Keppel will also leverage the extended land lease to advance the campus&rsquo third data centre, Keppel DC Singapore 9. This will be developed by Keppel and its two data centre private funds, the Keppel Data Centre Funds II and III.

 

[SINGAPORE]   Keppel DC Reit   : AJBU 0% reported distributable income of S$195.3 million for the nine months ended Sep 30, up 55.5 per cent from S$125.6 million a year earlier.

 

Its distribution per unit (DPU) over the same period rose 8.8 per cent to S$0.0767 from S$0.0705. 

 

The DPU takes into account the expanded unit base due to the additional 180.6 million new pro-rata preferential offering units listed on Oct 22, 2025.

 

The higher distributions came from contributions from its acquisitions as well as strong portfolio performance, said the real estate investment trust&rsquo s (Reit) manager in its Q3 business update on Friday (Oct 24).

 

Revenue for the period climbed to S$322.4 million, up 37.7 per cent from S$234.1 million. 

 

Similarly, net property income (NPI) rose 42.2 per cent to S$280.2 million from S$197.1 million.

 

The manager said that the higher NPI was due mainly to acquisitions of Keppel DC Singapore 7 and 8 and Tokyo Data Centre. 

 

Higher contributions from contract renewals and escalations also boosted the Reit&rsquo s NPI.

 

However, the contributions were partially offset by divestments of its Intellicentre Campus in Australia and Kelsterbach Data Centre in Germany, as well as the absence of its one-off dispute settlement sum at Keppel DC Singapore 1 received in 2024.

 

Its finance costs for the period dropped by 6.4 per cent. The manager attributed the fall to lower interest rates and interest savings from loan repayments, although the savings were partially offset by new acquisition loans in 2024.

 

For Q3, its cost of debt stood at 2.9 per cent, down from 3.3 per cent a year earlier. 

 

Meanwhile, aggregate leverage for the Reit stood at 29.8 per cent for Q3.

 

Portfolio occupancy stood at 95.8 per cent, while the Reit posted a 10 per cent portfolio reversion with no major contract renewals in Q3.

Keppel DC REIT and sponsor Keppel are buying the Tokyo Data Centre 3 for 82.1 billion yen, or $707 million. This freehold, newly-built hyperscale data centre is located in Inzai City, Greater Tokyo and will be the REIT' s second data centre asset in Japan.

 

The total purchase consideration represents a discount of 1.1% to the asset&rsquo s valuation of 83 billion yen, or $714.7 million.

 

Upon completion of the deal, Keppel DC REIT will have a 98.47% effective interest, with Keppel holding the remaining 1.53%.

 

On a pro forma basis, if the acquisition was completed on Jan 1 2024, distribution per unit for FY 2024 would increase by 2.8% from 9.451 cents to 9.712 cents.

 

According to Keppel DC REIT, the Tokyo Data Centre 3 is now fully contracted to a leading global hyperscaler for 15 years with built-in annual rent escalation.

 

&ldquo The accretive acquisition of Tokyo Data Centre 3 is aligned with our value creation strategy to pursue hyperscale opportunities in established data centre hubs," says Loh Hwee Long, CEO of the manager.

 

" The favourable demand-supply dynamics for data centres in Japan and the country&rsquo s strategic position as an interconnect location between Asia and the Americas make it a compelling market for long-term growth.

 

" We are pleased to expand our presence in Japan with another high-quality asset that will enhance our portfolio and strengthen our income diversification," adds Loh.

 

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.

 

Entitled unitholders of Keppel DC REIT will be offered 80 new units at $2.24 each for every 1,000 existing units held.

 

Besides the Tokyo data centre, proceeds will also go towards an asset enhancement initiative at Keppel DC Singapore 8, cover associated costs for a 30-year land lease extension for Keppel DC Singapore 1, as well as for debt repayment purposes.

 

The acquisition is expected to be completed by the end of the year and the Tokyo Data Centre 3 will improve Keppel DC REIT&rsquo s portfolio occupancy from 95.8% to 95.9% and increase the weighted average lease expiry from 6.92 years to 7.2 years, with its AUM reaching $5.7 billion, consisting of 25 data centres across 10 countries in Asia Pacific and Europe.

The two are AI-ready hyperscale data centres in Singapore

 

[SINGAPORE] The manager of Keppel DC Real Estate Investment Trust (Reit) has acquired the 51 per cent remaining interest in two artificial intelligence-ready hyperscale data centres in Singapore from sponsor Keppel for up to S$8.4 million. 

 

In a bourse filing on Wednesday (Sep 3), the manager said that the transaction was completed through the exercise of a call option with Keppel&rsquo s indirect wholly owned subsidiary. This gives the Reit full ownership of Memphis 1, the entity holding the two data centres.  

 

The consideration of up to S$8.4 million is subject to completion adjustments. 

 

Of this amount, about S$6.6 million is payable once the call option is completed. The sum is based on 51 per cent of Memphis 1&rsquo s net asset value at the time of completion, and includes the outstanding principal and accrued interest of the notes issued by it.

 

The remaining amount &ndash up to about S$1.8 million &ndash is payable following the completion of the call option, should there be a 10-year lease extension on the properties under the master agreement. 

 

The manager said the price was negotiated on a willing-buyer, willing-seller basis, using a fixed property value for the two data centres without assuming any lease extension. 

 

Two separate independent valuations put the combined market value of the properties as at May 1 at S$1.047 billion and S$1.064 billion, respectively. The average of the two valuations is S$1.056 billion, higher than the sum of the agreed property value of S$1.03 billion and the S$16.3 million paid as land premium. 

 

This resulting amount of S$1.046 billion was used to fix the call option property price, since it was the lower figure. 

 

The S$8.4 million consideration will be funded by debt and/or existing cash, said the manager. The acquisition is not expected to materially affect the trust&rsquo s net asset value or distribution per unit for the financial year ending Dec 31. 

Under the terms, the trust receives S$11 million a year for 15 years and gets 50% board representation

 

[SINGAPORE] The manager of Keppel DC Real Estate Investment Trust (Reit) on Monday (Aug 11) proposed the disposal of all its NetCo bonds and preference shares issued by network operator M1.

 

This comes after parent company Keppel announced that it will sell M1&rsquo s telco business to Simba Telecom, a mobile network operator, for S$1.43 billion. Keppel will receive nearly S$1 billion for its 83.9 per cent effective stake in M1.

 

Simba &ndash whose parent company is Tuas Ltd, which is owned by Australian businessman David Teoh&rsquo s TPG Telecom &ndash is expected to create more revenue pools and career opportunities from its combination with M1.

 

NetCo is a subsidiary of M1 and holds some of the telco&rsquo s mobile, fixed and fibre assets. It also has a network services agreement with M1.

 

On Dec 22, 2021, Keppel DC Reit subscribed to S$88.7 million in bonds issued by NetCo through its trustee, Perpetual (Asia). Under the terms, the Reit will receive S$11 million a year, comprising both the principal amount and interest, for a period of 15 years from the date of issuance.

 

Under the same transaction, Keppel DC Reit also subscribed to 100 per cent of the preference shares issued by NetCo, for S$1 million. 

 

These shares entitle the Reit to have 50 per cent representation on NetCo&rsquo s board of directors &ndash a move intended to give it additional protection for its investment in the bonds.

 

The NetCo bonds and preference shares will be sold to an unrelated third party, which is a Singapore-incorporated holding company, Keppel DC Reit&rsquo s manager said.

 

Assuming the sale was completed on Monday, the buyer will have to pay around S$79.2 million, the manager said. This amount comprises S$77.2 million as a principal amount for the NetCo bonds, S$1 million in accrued interest, and a principal amount of S$1 million for the preference shares. 

 

S$1.4 billion sale of M1&rsquo s telco business to Simba &ldquo important&rdquo despite accounting loss: Keppel CEO

The deal is subject to clearance from the Infocomm Media Development Authority.