Keppel DC REIT Buys Singapore Data Centre for $221M

Singapore-listed Keppel DC REIT has entered a deal to buy a data centre in the city-state for S$295 million ($221 million), as Singapore’s thriving market for outsourced data storage posts 13 percent annual revenue growth.

Keppel DC REIT, a dedicated data centre real estate trust, is buying a 99 percent interest in the five-storey Kingsland Data Centre located in the Jurong area of western Singapore from developer Kingsland Development, engineering company Nylect Holdings and Nylect International, according to a statement by the trust. The facility located at 13 Sunview Way is a 10-minute drive from the Pioneer MRT station.

Keppel Ramps Up Data Centre Portfolio

The 98,769 square foot (9,176 square metre) facility was completed in 2015 and its IT power is now fully committed. The data centre’s committed occupancy is 84.2 percent, with offices taking up the remaining space. After the acquisition is completed in the current quarter, the property that hosts internet enterprises and IT service providers will be renamed as Keppel DC Singapore 5 (KDC SGP 5).

“As a key data centre hub in Asia, Singapore continues to see strong demand from multinational firms for quality data centre space. The addition of KDC SGP 5 will allow Keppel DC REIT to establish a strategic presence in the western part of Singapore and diversify its offering to clients,” said Chua Hsien Yang, CEO of Keppel DC REIT Management in the statement.

Chua added that the facility will boost the data centre REIT’s footprint in Singapore to nearly 300,000 square feet of total lettable area. The acquisition is also expected to increase Keppel DC REIT’s distribution per unit (DPU).

The REIT will appoint a subsidiary of Keppel Data Centres Holding as the master lessee and facility manager for the newly acquired property, a strategy similar to that pursued with other data centres in the REIT’s portfolio.

Trust’s Portfolio Grows to 15 Server Farms

The acquisition will be funded by the proceeds of approximately S$303.1 million raised from the private placement of new units in the listed REIT next Wednesday, the company said.

After the acquisition, the trust’s assets under management will increase to approximately S$1.97 billion ($1.47 billion), with an aggregate lettable area of over 1.1 million square feet across 15 data centres in Europe, Southeast Asia and Australia.

Keppel Corporation, which owns the manager of Keppel DC REIT through its subsidiaries, is a Singaporean conglomerate engaging in property, infrastructure and asset management businesses.

The acquisition comes as Singapore’s data centre market sees robust growth. In 2017, the market generated an estimated S$1.3 billion in revenue, according to Structure Research, a Toronto-based research consultancy, as cited by Datacenternews. The research firm project that the country’s data centre will grow by 13 percent year-over-year in 2018, and will be worth S$2 billion by 2021.