Keppel divests nearly $363m in data centre assets in one day

Keppel DC Singapore 5 data centre facility

Infrastructure company Keppel has kicked off the week with not one but three major announcements as the company rejigs its data centre portfolio.

The Manager of Keppel DC REIT has entered into an agreement for the proposed acquisition of a 99% interest in Keppel DC Singapore 4 data centre facility at an agreed value of $280m (S$384.9m), with the remaining 1% to be acquired by an entity of Keppel Data Centres Holding.

The company has also made an agreement for the proposed acquisition of 1-Net North Data Centre, Singapore at an agreed value of $146m (S$200.2m), and revealed that both acquisitions are expected to be completed in 4Q 2019.

The Manager intends to fund the proposed transactions with proceeds from a fully underwritten equity fundraising exercise of approximately $473.8m comprising a combination of a private placement and preferential offering, as well as debt.

The equity fundraising exercise will reduce Keppel DC REIT’s aggregate leverage ratio from 31.9% as at 30 June 2019, to 30.3%, increasing the REIT’s debt headroom to pursue further growth opportunities.

The proposed data centre acquisitions are expected to be highly accretive to Keppel DC REIT’s Distribution per Unit.

When completed, the REIT’s assets under management will grow by 30.7% to $1.8bn (S$2.58bn), comprising 17 data centres – one in key data centre hubs globally, spanning an aggregate area of approximately 1,410,497 sq ft.

“Singapore is amongst the world’s fastest-growing data centre markets, driven by demand from internet enterprises as well as the IT services, telecommunications and financial services sectors,” said Chua Hsien Yang, CEO of Keppel DC REIT Management.

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“The strategic acquisitions of these two quality data centres will strengthen Keppel DC REIT’s foothold in this robust market.

“With the proposed acquisitions, Keppel DC REIT will have data centres across the Northern, Central, Eastern and Western regions of Singapore, which puts us in a strong position to serve a wider range of clients.”

The data centre in Singapore is a five-storey carrier-neutral and purpose-built colocation facility which is 92.0% occupied, and the 1-Net North DC is a five-storey purpose-built facility on a triple-net master lease.

The company added that the acquisitions will strengthen the income resilience and stability of Keppel DC REIT’s portfolio.

The seller for KDC SGP 4 is a 70:30 joint venture between Alpha Data Centre Fund, which is managed by Alpha Investment Partners Limited, and Keppel Data Centres Holding.

The sellers for 1-Net North DC are Keppel Infrastructure Trust’s wholly-owned subsidiary with a 51% stake in the data centre, and Shimizu Corporation’s wholly-owned subsidiary with a 49% stake in the data centre.

The agreed values for both acquisitions were negotiated on a willing-buyer willing-seller basis, taking into account their respective independent valuations.

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