Keppel DC REIT to raise $473.8m to fund acquisitions

It will be used to buy 99% in Keppel DC Singapore 4 and 1-Net North Data Centre.

Keppel DC REIT is planning to raise $473.8m through a fully underwritten equity fund raising exercise comprising a combination of a private placement and preferential offering, as well as debt, according to an announcement.

The proceeds will be used to fund the proposed acquisitions of a 99% interest in Keppel DC Singapore 4 (KDC SGP 4) with an agreed value of approximately $384.9m as well as the purchase of 1-Net North Data Centre for $200.2m. Both acquisitions are expected to be completed in Q4.

Also read: Keppel unit sells 51% stake in DataCentre One for $102.9m

When completed, the REIT's assets under management will reportedly grow by 30.7% to $2.58b, comprising 17 data centres in data centre hubs globally and spanning an aggregate lettable area of more than 1.41 million sq ft.

"Singapore is amongst the world's fastest-growing data centre markets, driven by demand from internet enterprises as well as the IT services, telecommunications and financial services sectors.With the proposed acquisitions, Keppel DC REIT will have data centres across the Northern, Central, Eastern and Western regions of Singapore,” said Chua Hsien Yang, CEO of Keppel DC REIT.

KDC SGP 4 is a five-storey carrier-neutral and purpose-built colocation facility which is 92% occupied, according to the announcement. It is located close to two of the REIT's existing data centres, Keppel DC Singapore 2 and Keppel DC Singapore 3 at the Tampines Industrial Park.

Meanwhile, 1-Net North DC is a five-storey purpose-built facility on a triple-net master lease with approximately 17 years remaining, and an option to renew for a period of 7.6 years. It is located just outside the Woodlands Regional Centre, a planned commercial hub that will serve as the Northern Agri-Tech and Food Corridor, said Keppel DC REIT

The pro-forma occupancy rate for the enlarged portfolio is expected to improve from 93.2%, based on the portfolio occupancy rate as at 30 June 2019, to 94.1%. Portfolio weighted average lease expiry (WALE) by leased lettable area is expected to improve from 7.8 years to 8.9 years post-completion.

To demonstrate support for the REIT's long-term growth, Keppel Group, through Keppel Telecommunications & Transportation and Keppel Capital, will irrevocably undertake to subscribe for their pro-rata Units under the preferential offering.