The Singaporean asset management firm Keppel has acquired a data center outside Tokyo. Its data center arm, Keppel DC REIT, has taken a 100 percent stake in the five-storey Tokyo Data Centre 3 for JPY 82.1 billion ($555 million).
The acquisition would add a second data centre asset in Japan to Keppel DC REIT’s portfolio, strengthening its presence in the largest data centre hub in Asia Pacific (excluding China). Japan continues to experience strong demand while new supply remains constrained due to power and construction limitations.
Strategically situated in Inzai City, one of the most established data centre clusters in Japan, Tokyo Data Centre 3 offers robust network connectivity and low latency to Central Tokyo. The five-storey data centre is built to Tier III-equivalent specifications and the latest seismic standards with a base isolation system. The facility is managed by an established global third-party operator with over two decades of data centre experience and a proven track record.
Mr Loh Hwee Long, CEO of the Manager of Keppel DC REIT, said, “The accretive acquisition of Tokyo Data Centre 3 is aligned with our value creation strategy to pursue hyperscale opportunities in established data centre hubs. The favourable demand-supply dynamics for data centres in Japan and the country’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.”
The acquisition of Tokyo Data Centre 3 is expected to be immediately DPU-accretive. On a pro forma basis, if the acquisition were completed on 1 January 2024, DPU for FY 2024 would increase by 2.8% from 9.451 cents to 9.712 cents.
Following the completion of the acquisition which is expected by end 2025, Tokyo Data Centre 3 will improve Keppel DC REIT’s portfolio occupancy from 95.8% to 95.9% and increase the weighted average lease expiry from 6.9[2] years to 7.2 years[3]. It will also strengthen portfolio resilience and diversification by increasing the proportion of rental income derived from another leading global hyperscaler. Keppel DC REIT’s assets under management will further increase to $5.7 billion with 25 data centres across 10 countries in Asia Pacific and Europe.
In connection with 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 for every 1,000 existing Units held, at an issue price of $2.24 per Unit. The proceeds from the preferential offering will be used to partially fund the acquisition of Tokyo Data Centre 3, finance 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. Assuming the deployments were completed and the contributions had commenced for the transactions both on 1 January 2024, the estimated pro forma accretion is expected to be approximately 3.4%. Details of the Preferential Offering, including eligibility and application procedures, will be set out in the instruction booklet to be despatched to entitled unitholders in due course.
