Keppel DC Reit spends US$1.2 billion on two freehold data centres in Japan

On September 1, Keppel DC Reit and Keppel announced an agreement to collectively acquire nearly all of two Tokyo data centres for 190 billion yen (US$1.2 billion). The two data centres, Tokyo Data Centre 4 and Tokyo Data Centre 5, are freehold and located in Inzai City, Greater Tokyo, Japan. Keppel DC Reit and Keppel will own 90% of each data centre, with the existing operator retaining a 10% interest.

Upon completion in Q4 2026, Keppel DC Reit will hold an 88.62% effective interest, while Keppel will hold 1.38%. The acquisition is anticipated to be immediately DPU-accretive, with a 2.6% increase in DPU for FY2025. Keppel DC Reit will allocate approximately 168.4 billion yen for the purchase, representing a 2.1% discount to the assets' valuation of 194 billion yen.

The data centres will feature contracted rent escalators and have in-place rents at least 30% below market rates. The manager expects the acquisition to broaden Keppel DC Reit's client base and reduce client concentration risk. Post-acquisition, the top client's contribution to portfolio rental income is projected to decrease from 43.5% to 38.2%, while Japan's contribution will increase from 9% to 23%.