Keppel DC Reit and Keppel take 90% stakes in two Japan hyperscale data centres
Located in Inzai City, one of Japan’s many established hyperscale data-centre clusters, the two totally matched, colocation possessions are totally occupied by four investment-grade internet venture and IT services clients.
Three of the four investment-grade clients across the two Tokyo information facilities are new to the Reit’s profile, that broadens its client base and decreases client focus risk.
The total purchase rate on a 100% basis is JPY190 billion ($1.55 billion), which reaches a 2.1% price cut to the properties’ valuation of JPY194 billion, said the Reit administrator in a Sept 1 bourse declaring.
Keppel DC Reit said the purchase will raise its distribution per unit instantly while also providing multiple channels of long-term income growth. The assets benefit from contracted average annual rent rise of regarding 2.8%, and the in-place rents are estimated to be at the very least 30% listed below prevailing market rents.
At the same time, the existing operator is going to preserve a 10% stake in each asset, to ensure “placement of interests and working continuity”, the bourse filing stated.
With the procurement, Japan’s contribution to the Reit’s portfolio leasing income increases to about 23%, from 9% as at end-June this year.
Keppel DC Reit will certainly thus pay about JPY168.4 billion for its reliable interest in both information hubs.
Its manager intends to fund the acquisition with a mix of equity and yen-denominated debt. The deal is expected to be finished in the 4th quarter of this year.
The Reit will take an 88.62% stake in each data centre, while Keppel, with its interest in Keppel Japan KK, will hold a 1.38% effective interest.
Loh Hwee Long, CEO of the manager of Keppel DC Reit, claimed this broadens its network of institutional and functional partners, and strengthens its ability to source and get access to future investment possibilities internationally.
Keppel DC Reit and Keppel are jointly getting 90% effective interests in 2 freehold, hyperscale data centres– Tokyo Data Centre 4 and Tokyo Data Centre 5– in Greater Tokyo.
The weighted average rent expiry is about 4.5 years for Tokyo Data Centre 4 and 10.6 years for Tokyo Data Centre 5.
