Keppel DC REIT acquires Kingsland Data Centre
Monday, May 07, 2018
Acquisition will be funded by private placement and is expected to be DPU accretive

Keppel DC REIT has entered into a conditional sale and purchase agreement for the acquisition of 99% interest in Kingsland Data Centre at an agreed value of $295.1 million.

Kingsland Data Centre is a five-storey, purpose-built, carrier-neutral colocation data centre hosting leading internet enterprise and IT services clients. Completed in phases starting from 2015, the facility is located in Jurong with approximately 98,769 sq ft of net lettable area. The facility's IT power is fully committed. In addition, the facility's committed occupancy is 84.2%, with the vacancy being offices.

The acquisition is expected to be accretive to Keppel DC REIT's distribution per unit (DPU). Upon the expected completion of the acquisition in the second quarter of 2018, the facility will be renamed as Keppel DC Singapore 5 (KDC SGP 5). Leveraging the Keppel Group's data centre operational track record, it is intended that a subsidiary of Keppel Data Centres Holding will be appointed as master lessee and facility manager under a Keppel master lease arrangement that is similar to the other Singapore data centres in Keppel DC REIT's portfolio.

The acquisition will be funded by the net proceeds raised from the private placement of 224.0 million new Units in Keppel DC REIT announced today, and the remaining net proceeds of its pro-rata preferential offering that was launched in October 2016. The private placement aims to raise gross proceeds of approximately $303.1 million.

Mr Chua Hsien Yang, CEO of Keppel DC REIT Management Pte. Ltd., said, "As a key data centre hub in Asia, Singapore continues to see strong demand from multinational firms for quality data centre space. The addition of KDC SGP 5 will allow Keppel DC REIT to establish a strategic presence in the western part of Singapore and diversify its offering to clients. KDC SGP 5 will boost the REIT's footprint in Singapore to nearly 300,000 sq ft of aggregate lettable area."

The REIT's expanded portfolio will create greater income resilience and a stronger platform for growth. Following the transaction and private placement, based on the pro forma as at 1Q2018, the REIT's aggregate leverage will improve from 37.4% to approximately 32.1%. Assets under management will increase to approximately $1.97 billion, with aggregate lettable area of approximately 1,142,736 sq ft across 15 data centres in Asia Pacific and Europe.

The trading of the new Units on the Singapore Exchange is expected to commence at 9.00 a.m. on 16 May 2018. Citigroup Global Markets Singapore Pte. Ltd. and DBS Bank Ltd. are the joint bookrunners and underwriters in relation to the private placement.

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