Its unit has entered into a sale and purchase agreement with Basis Bay Services MSC, an unrelated third party

 

KEPPEL DC Real Estate Investment Trust (Reit) is divesting Basis Bay Data Centre in Cyberjaya, Malaysia, for RM55.6 million (S$16.9 million).

 

On Thursday (Jan 2), Keppel DC Reit&rsquo s manager said that Basis Bay Capital Management, a subsidiary of the Reit, had entered into a sale and purchase agreement on Dec 31 with Basis Bay Services MSC, an unrelated third party which is also the current master lessee and facility manager of the property.

 

Keppel DC Reit&rsquo s share of the consideration paid by Basis Bay Services MSC is RM55.1 million, based on its 99 per cent shareholding in Basis Bay Capital Management and the divestment consideration.

 

According to the latest valuation by JLL as at Dec 1, the assessed market value of Keppel DC Reit&rsquo s 99 per cent freehold interest in the property was RM53.7 million. Its share of the consideration is thus 2.6 per cent above the assessed market value.

 

The divestment is expected to be completed around the third quarter of 2025. It is in line with the Reit manager&rsquo s &ldquo proactive asset management strategy to optimise portfolio performance&rdquo .

 

The divestment is not expected to have any material impact on Keppel DC Reit&rsquo s net asset value and distribution per unit for the financial year ending Dec 31, 2025.

 

The manager of Keppel DC REIT has announced it is divesting the Basis Bay Data Centre in Cyberjaya, Selangor Darul Ehsan, Malaysia for RM55.6 million ($16.9 million).

 

According to a Jan 2 bourse filing, Keppel DC REIT&rsquo s subsidiary Basis Bay Capital Management entered into a sale and purchase agreement on Dec 31, 2024 with Basis Bay Services MSC, an unrelated third party that is also the current master lessee and facility manager of the property.  

 

The divestment is expected to be completed around 3Q2025, says the REIT manager. 

 

Basis Bay Data Centre, through Basis Bay Capital Management, was already part of Keppel DC REIT&rsquo s portfolio when it listed in 2014. 

 

Keppel DC REIT&rsquo s share of the consideration paid by the purchaser is RM55.1 million, based on Keppel DC REIT&rsquo s 99.0% shareholding in Basis Bay Capital Management. This share of the consideration is 2.6% above the assessed market value of Keppel DC REIT&rsquo s 99.0% freehold interest in the property, according to a Dec 1, 2024 valuation by JLL.

 

According to Keppel DC REIT&rsquo s website, Basis Bay is a four-storey data centre co-location facility with an adjacent two-storey office building in Cyberjaya, approximately 50km southwest of the Kuala Lumpur City Centre and 30km from Kuala Lumpur International Airport.

 

The divestment is not expected to have any material impact on Keppel DC REIT&rsquo s net asset value and distribution per unit of Keppel DC REIT for the financial year ending Dec 31, 2025. 

The manager of Keppel DC REIT says the REIT has received valid acceptances and excess applications for a total of 237,305,023 preferential offering units, as at the close of the preferential offering on Dec 10. 

 

Valid acceptances and excess applications stood at 119,529,616 and 117,775,407 preferential offering units, or 80.5% and 79.4% respectively.  

 

According to the manager, a total of 28,883,447 excess preferential offering units, which were not validly accepted or not taken up, is set to be allotted to satisfy applications for excess preferential offering units.

 

In the allotment of excess preferential offering units, preference will be given to the rounding of odd lots. 

 

The manager, directors of the manager and substantial unitholders who have control or influence over Keppel DC REIT or the manager in connection with the day-to-day affairs of the REIT or the manager or the terms of the preferential offering, or have representation (direct or through a nominee) on the board of directors are expected to rank last in priority for the rounding of odd lots and allotment of excess preferential offering units.

 

The manager adds that a total of 148,413,063 preferential offering units will be issued at the issue price of $2.03 per preferential offering unit to raise gross proceeds of approximately $301.3 million.

 

Keppel DC REIT&rsquo s preferential offering units are expected to be listed and quoted on the mainboard of the SGX-ST with effect from 9.00 a.m. on Dec 18. 

It is on the basis of 86 preferential units for every 1,000 existing units

 

THE manager of Keppel DC Real Estate Investment Trust (Reit) on Monday (Dec 2) announced the launch of its preferential offering for 148.4 million new units at an issue price of S$2.03 apiece. 

 

The non-renounceable preferential offering, which is on the basis of 86 preferential units for every 1,000 existing units, opens on Monday at 9 am and will close on Dec 10. 

 

It is part of an equity funding exercise to raise gross proceeds of around S$1.1 billion, the manager said on Nov 19. The exercise also includes a private placement, which closed on Nov 20 at S$2.09 apiece with 334.9 million new units issued, and the issuance of sponsor subscription units. 

 

The S$2.03 issue price represents a discount of 4.5 per cent from the six-month volume-weighted average price of S$2.12229 per unit. 

 

The preferential offering will close at 5.30 pm for acceptances made via the application form, electronic applications via the Singapore Exchange investor portal and remittances via PayNow, and at 9.30 pm for acceptances made via electronic applications through an ATM of a participating bank. 

 

Entitled unitholders who wish to accept their allotment of new units under the preferential offering should do so according to the instruction booklet that the Reit&rsquo s manager launched on Monday. 

The private placement draws &lsquo strong demand from new and existing unitholders globally&rsquo , says the manager

 

KEPPEL DC Real Estate Investment Trust (Reit) closed its private placement at S$2.09 apiece with 334.9 million new units issued, said the manager on Wednesday (Nov 20).

 

The private placement, which was 3.4 times subscribed, raised gross proceeds of about S$700 million after it was upsized. This brings the total size of the equity fundraising to about S$1.1 billion, from about S$985 million previously.

 

The equity funding exercise, which was announced on Tuesday, comprises a private placement, a non-renounceable preferential offering and an issuance of sponsor subscription units.

 

The issue price of the private placement represents an approximate 5.1 per cent discount to the volume-weighted average price (VWAP) of S$2.2017 per unit for all trades done on the Singapore Exchange on Monday, up to the time the agreement was signed on Tuesday.

 

For illustrative purposes, the issue price represents a 3.3 per cent discount to the adjusted VWAP of S$2.1609 per unit, after subtracting an advanced distribution of S$0.04083 per unit.

 

The private placement drew &ldquo strong demand from new and existing unitholders globally&rdquo , with a majority of them being long-only investors and real estate specialists, said the manager.

 

Trading of the private placement units is expected to start on Nov 28.

 

The issue price of the preferential offering has been fixed at S$2.03 per new unit. The allotment ratio is fixed on the basis of 86 new units for every 1,000 existing units.

 

The issue price of S$2.03 represents a discount of about 7.8 per cent to the VWAP, and about 6.1 per cent to the adjusted VWAP &ndash for illustrative purposes.

 

Some S$301.3 million is expected to be raised from the preferential offering, while about S$85 million will be raised from the issuance of sponsor subscription units.

 

The amount raised from the issuance of subscription units will be used to partially fund the purchase of two hyperscale data centres from the Reit&rsquo s sponsor Keppel.

 

The issue price per subscription unit has been fixed at S$2.09 per unit, equal to the issue price of the private placement.

 

About S$945.2 million or 94.4 per cent of the gross proceeds from the private placement and preferential offering will be used to partially fund the acquisition of the two data centres.

 

Gross proceeds from the private placement and preferential offering amount to S$1 billion.

 

About S$43.1 million or 4.3 per cent will be used to repay and refinance debt and/or capital expenditure, as well as pay for upgrades to properties.

 

Another S$13 million or 1.3 per cent is for paying estimated fees and expenses incurred by the Reit in connection with the equity fundraising exercise.

 

The remaining amount will be used for general corporate purposes and/or working capital purposes.

The deal, which will be 8.1% accretive to the Reit&rsquo s distribution per unit, is expected to be completed by end-2025

 

THE manager of Keppel DC Real Estate Investment Trust (Keppel DC Reit) has proposed to acquire interests in two artificial intelligence (AI) ready hyperscale data centres from a joint venture (JV) led by sponsor Keppel for S$1.4 billion.

 

The JV owns the Keppel Data Centre Campus at Genting Lane in Singapore, which comprises the two data centres and a vacant land plot earmarked for a third data centre, which has been excluded from the deal.

 

Keppel DC Reit will purchase a 49 per cent interest in the JV, as well as subscribe for two new classes of securities issued by the JV for up to S$1.03 billion.

 

This will entitle Keppel DC Reit to 99.49 per cent of the economic interest from the two data centres &ndash KDC SGP 7 and KDC SGP 8.

 

Keppel DC Reit will also be granted a call option, which the manager expects to exercise in the second half of 2025, to acquire the remaining 51 per cent stake in the JV from Keppel, which holds the remaining 0.51 per cent economic interest. 

 

As part of the proposed transaction, Keppel DC Reit shall pay an additional S$350 million should a 10-year land tenure lease extension to 2050 be approved for the Keppel Data Centre Campus by the relevant authorities. This will be paid to the JV&rsquo s shareholders, Keppel&rsquo s private fund Alpha Data Centre Fund and its parallel fund (collectively known as ADCF), and co-investors.

 

The deal is expected to be completed by end-2025, Keppel and Keppel DC Reit said in a joint statement on Tuesday (Nov 19).

 

Accretive acquisition

The proposed acquisition by Keppel DC Reit will expand its assets under management by 36 per cent to S$5.2 billion, with 25 data centres across Asia-Pacific and Europe.

 

The total acquisition cost includes the estimated purchase consideration of about S$1.39 billion, other expenses of about S$37.8 million and acquisition fees of about S$13.8 million.

 

Keppel DC Reit manager said it intends to finance part of total outlay with about S$973.2 million from the net proceeds raised from an equity fund raising launched on Tuesday.

 

About S$83.4 million will also be drawn down from debt facilities to pay for the acquisition. The manager will also issue acquisition fee units amounting to about S$10.2 million to finance the deal.

 

Loh Hwee Long, chief executive of Keppel DC Reit&rsquo s manager, said: &ldquo The proposed acquisition will deliver strong positive cash flows and be immediately distribution per unit accretive.&rdquo

 

He added that the new assets will allow the Reit to &ldquo capture potential upside from rental uplifts and capacity expansion&rdquo .

 

Keppel DC Reit&rsquo s manager is also positive on the growing demand for data centre space as supply remains constrained in the short to medium term. &ldquo This tight demand-supply dynamic is likely to continue to have an upward pressure on colocation rates,&rdquo it added.

 

On a pro forma basis, the proposed acquisition is expected to lift Keppel DC Reit&rsquo s distribution per unit for the first half of fiscal year 2024 by 8.1 per cent. It would also raise the Reit&rsquo s net asset value per unit for H1 to S$1.53 from S$1.37.

 

Assuming that the deal was completed on Sep 30, 2024, Keppel DC Reit&rsquo s aggregate leverage is expected to fall to 37.9 per cent, from 39.7 per cent.

 

KDC SGP 7 and KDC SGP 8 have a combined net lettable area (NLA) of 150,455 square feet. Their weighted average lease expiry by NLA stood at 4.5 years as at end-September 2024.

 

Both data centres have attained the Building and Construction Authority&rsquo s Green Mark (Platinum Award). They can handle artificial intelligence inference workloads and can accommodate fit-out modifications, including liquid cooling.

 

The deal is not expected to have any material impact on the earnings per share and net tangible assets per share of Keppel for the financial year ending Dec 31, 2024.

 

The proposed transaction is subject to the approval of Keppel DC Reit&rsquo s unitholders at an extraordinary general meeting, which will be convened at a later date.

 

Post divestment, Keppel will continue to earn recurring income from asset management and operation and maintenance of the two data centres, and will also develop the third data centre in the Keppel Data Centre Campus with Keppel&rsquo s private funds.

The manager intends to declare an advanced distribution of S$0.04063 to S$0.04103 per unit in connection with the private placement

 

THE manager of Keppel DC Reit plans to launch an equity funding exercise to raise gross proceeds of about S$1 billion, it announced on Tuesday (Nov 19).

 

This comprises a private placement to raise around S$600 million in gross proceeds, and a non-renounceable preferential offering to raise gross proceeds of about S$300 million. It will also include an issuance of subscription units to raise about S$85 million.

 

The private placement units will be priced between S$2.074 and S$2.128 apiece.

 

This represents a discount of between 3.3 and 5.8 per cent to the volume-weighted average price (VWAP) of S$2.2017 per unit for trades done on Monday.

 

The manager also intends to declare an advanced distribution of between S$0.04063 and S$0.04103 per unit in connection with the private placement.

 

Assuming an advanced distribution of S$0.04083 per unit is deducted, the private placement issue price range represents a discount of between 1.5 and 4 per cent to an adjusted VWAP of S$2.1609 per unit &ndash for illustrative purposes.

 

Under the preferential offering, new units will be priced between S$2.03 and S$2.08 apiece. This represents a discount of between 5.5 and 7.8 per cent to the VWAP of S$2.2017 per unit.

 

The preferential offering issue price range represents an approximate 3.7 to 6.1 per cent discount to the adjusted VWAP of S$2.1609 per unit, for illustrative purposes.

 

Meanwhile, the issue price for the sponsor subscription unit will be the same as the private placement issue price.

 

On Tuesday, Keppel DC Reit&rsquo s manager entered into a subscription agreement with Keppel DC Investment Holdings (KDCIH), a wholly owned subsidiary of Keppel Data Centres.

 

Under the agreement, KDCIH will subscribe for about S$85 million worth of subscription units. The units are expected to be issued to KDCIH in early 2025.

 

Some S$888.2 million, or 98.7 per cent of gross proceeds from the private placement and preferential offering, will be used to finance Keppel DC Reit&rsquo s proposed acquisition of two data centres in Singapore.

 

Around S$85 million raised from the sponsor subscription units will be used to finance the acquisition as well.

 

About S$11.8 million, or 1.3 per cent of the gross proceeds from the private placement and preferential offering, will be used to pay for fees and expenses incurred by the real estate investment trust in relation with the fundraising exercises.

 

The remaining amount from the placement and preferential offering will be used for general corporate purposes and/or working capital purposes.

 

The placement launched on Tuesday and will close on Wednesday, while the preferential offering will begin on Dec 2 and close on Dec 10. The record date for the preferential offering and advanced distribution is Nov 27.