- KDCREIT and Keppel have entered into agreements to jointly acquire a 90% effective interest in Tokyo Data Centre 4 and Tokyo Data Centre 5, two freehold, hyperscale fully fitted colocation data centres in Inzai City, Greater Tokyo, from unrelated third-party sellers. The aggregate purchase consideration is JPY190bn (S$1,549mn, 100% basis), representing a c.2.1% discount to the properties’ valuation of JPY194bn (S$1,581mn). KDCREIT will pay JPY168.4bn (S$1,372mn) for an 88.62% effective interest, while Keppel will hold a 1.38% effective interest. The existing third-party operator will retain a 10% interest in each data centre. The properties have a blended NPI yield of 4.5%-5.0%.
- The acquisition is expected to be 2.6% accretive based on FY25 pro-forma DPU. It has a contractual rent escalation of 2.8% per annum and is under-rented by at least 30%. It will be funded through a private placement to raise no less than S$600mn (43%) and JPY debt (57%).
- We maintain ACCUMULATE with an unchanged TP of S$2.46. We have yet to update our financials for the acquisition and private placement. However, the new units from the private placement are expected to increase the unit base by c.12%. We are positive on the deal as it provides exposure to high-quality, fully occupied hyperscale data centres in a key Tokyo data centre market, with strong embedded rental upside and contractual rent escalations. The acquisition is also expected to be 2.6% DPU-accretive despite the equity fund-raising.
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