Keppel DC REIT divests Sydney data centre for $152.1m

The agreed value is 148.6% higher than the original investment.

Keppel DC REIT Management Pte. Ltd. said it has entered into a sale and purchase agreement to divest 100% of its interest in Intellicentre Campus in Sydney, Australia to Macquarie Data Centres for $152.1m.

In a statement, Keppel DC REIT said the amount represents a 35.4% premium to the property’s FY2023 valuation of around $112.3m and is 148.6% higher than the original investment of around $73m. This also represents an exit cap rate of approximately 3.6%.

The buyer is the indirect wholly-owned subsidiaries of Macquarie Technology Group (MTG), which is also the ultimate parent company of Macquarie Data Centres, the existing tenant of the property.

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Following this move, Keppel DC REIT said it will re-invest around $78.7m of the proceeds into an Australia Data Centre note issued by Macquarie Data Centres Group.

The AU DC Note is guaranteed by MTG, whose facilities house data for some of the world’s biggest hyperscalers, clouds and 42% of the Australian Federal Government. 

The AU DC Note will give Keppel DC REIT a regular income stream starting from approximately $5.5m annually for 8.5 years.

Keppel DC REIT CEO Loh Hwee Long said the transactions present the company an opportunity to “crystallise value from its investment in Intellicentre Campus at a highly attractive premium while continuing to earn recurring income that mirrors the rents that we have been receiving from the asset.”

Meanwhile, Keppel DC REIT said it will repay existing loans of around $37.7m relating to the original investment of Intellicentre Campus.

The remaining proceeds of around $19.5m will be used for repaying debt, funding acquisitions, capital expenditures and/or working capital, it added.