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

Positioned in Inzai City, one of Japan’s the majority of established hyperscale data-centre clusters, the two totally matched, colocation possessions are fully inhabited by four investment-grade internet business and IT companies clients.

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

Keppel DC Reit will certainly therefore pay regarding JPY168.4 billion for its effective rate of interest in the two information hubs.

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The Reit will take an 88.62% stake in each data centre, whilst Keppel, with its interest in Keppel Japan KK, are going to hold a 1.38% reliable interest.

Keppel DC Reit and Keppel are jointly getting 90% efficient interests in 2 property, hyperscale data centres– Tokyo Data Centre 4 and Tokyo Data Centre 5– in Greater Tokyo.

The complete purchase price on a 100% basis is JPY190 billion ($1.55 billion), that is at a 2.1% price cut to the properties’ assessment of JPY194 billion, stated the Reit manager in a Sept 1 bourse filing.

Keppel DC Reit said the purchase will raise its distribution per unit instantly whilst also providing several channels of long-term earnings growth. The assets benefit from acquired average annual rent growth of about 2.8%, and the in-place rental fees are approximated to be at least 30% below dominating market rents.

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

On the other hand, the existing operator will retain a 10% risk in each asset, to assure “alignment of interests and working continuity”, the bourse filing stated.

Loh Hwee Long, CEO of the executive of Keppel DC Reit, stated this broadens its network of institutional and functional partners, and enhances its capacity to source and access future investment prospects internationally.

3 of the 4 investment-grade clients across the two Tokyo data facilities are updated to the Reit’s profile, which broadens its client base and reduces client concentration risk.

Its manager intends to finance the purchase with a mix of equity and yen-denominated debt. The deal is expected to be finished in the 4th quarter of this year.