Keppel DC Reit and Keppel take 90% stakes in two Japan hyperscale data centres

Loh Hwee Long, CEO of the manager of Keppel DC Reit, claimed this expands its network of institutional and functional partners, and enhances its capacity to source and access future investment possibilities internationally.

The total purchase rate on a 100% basis is JPY190 billion ($1.55 billion), that reaches a 2.1% discount rate to the assets’ valuation of JPY194 billion, said the Reit administrator in a Sept 1 bourse filing.

With the purchase, Japan’s contribution to the Reit’s profile leasing income increases to around 23%, from 9% as at end-June this year.

Thomson Reserve condo floor plan

Established in Inzai City, one of Japan’s the majority of developed hyperscale data-centre clusters, both totally matched, colocation possessions are completely occupied by four investment-grade internet venture and IT companies clients.

Three of the four investment-grade clients across the two Tokyo data facilities are new to the Reit’s portfolio, that expands its client base and decreases client focus risk.

Its manager intends to finance the procurement with a mix of equity and yen-denominated debt. The deal is expected to be completed in the fourth quarter of this year.

Meanwhile, the existing operator is going to retain a 10% stake in each asset, to guarantee “positioning of interests and operational continuity”, the bourse filing said.

Keppel DC Reit and Keppel are collectively getting 90% effective interests in 2 property, hyperscale information centres– Tokyo Data Centre 4 and Tokyo Data Centre 5– in Greater Tokyo.

The weighted average lease expiry is approximately 4.5 years for Tokyo Data Centre 4 and 10.6 years for Tokyo Data Centre 5.

The Reit will take an 88.62% claim in each data center, while Keppel, through its interest in Keppel Japan KK, will hold a 1.38% efficient interest.

Keppel DC Reit said the procurement will increase its distribution each instantly while also offering multiple avenues of long-term earnings growth. The properties benefit from acquired average annual lease growth of concerning 2.8%, and the in-place leas are estimated to be at least 30% listed below dominating market rents.

Keppel DC Reit will therefore pay regarding JPY168.4 billion for its reliable interest in the two data hubs.