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Singaporean conglomerate Keppel announced on November 19 that it will sell its data centre joint venture to its real estate investment trust, Keppel DC REIT, for $1.38 billion.
The joint venture, which is majority-owned by Keppel’s connectivity division and Cuscaden Peak Investments Private Limited, owns the Keppel Data Centre Campus in Singapore. The campus includes two fully contracted data centres, Keppel DC Singapore 7 and Keppel DC Singapore 8, both of which have 100% occupancy with global hyperscale clients in the cloud services, internet enterprise, and telecommunications sectors.
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Funding for the construction of the data centres came from Keppel’s private fund, Alpha Data Centre Fund, its parallel fund, and co-investors.
Keppel DC REIT will acquire a 49% stake in the joint venture and subscribe for two new classes of securities worth up to $1.03 billion, giving the REIT a 99.49% economic interest in both data centres. Additionally, the REIT will have the option to acquire the remaining 51% stake from Keppel in the second half of 2025, which will give it a 0.51% economic interest in the data centres.
If the land tenure lease for the campus is extended to 2050, Keppel DC REIT will pay an additional $350 million to the joint venture’s shareholders. This proposed acquisition is expected to increase the REIT’s distribution per unit by 8.1% and expand its assets under management by 36% to $5.2 billion. It will also increase the REIT’s portfolio to 25 data centres across Asia Pacific and Europe.
Keppel’s share of the divestment is estimated to be around $280 million and includes consideration for the 51% stake in the joint venture and the expected land tenure lease extension. The joint venture also has a vacant land plot for a third data centre, which will be sub-leased to Keppel’s private funds, Keppel DC Fund II and Keppel DC Fund III. Keppel plans to develop the third data centre, KDC SGP 9, with these funds.
Manjot Singh Mann, CEO of Keppel’s connectivity division, highlights the company’s strength as a global asset manager and operator, as well as its integrated ecosystem that provides access to critical resources and strong customer relationships. He adds that this deal will create strong value for Keppel, its private funds, and the REIT.
Loh Hwee Long, CEO of KDC REIT’s manager, is excited about the proposed acquisition, which will generate positive cash flow and immediately increase the REIT’s distribution per unit. He believes that adding these assets to the REIT’s portfolio will increase income resilience and potentially lead to rental upgrades and capacity expansions, solidifying the REIT’s position as one of the largest data centre owners in Singapore.
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The proposed transaction is expected to be completed by the end of 2025.