Keppel DC REIT to Acquire Remaining Interests in Strategic Singapore Data Centres

Key Highlights

• Acquisition of Remaining Stakes: Keppel DC REIT is set to acquire the remaining 10% interest in Keppel DC Singapore 3 (KDC SGP 3) and 1% interest in Keppel DC Singapore 4 (KDC SGP 4) from Keppel Data Centres Holding Pte. Ltd., a wholly owned subsidiary of sponsor Keppel Ltd.
• Full Ownership Achieved: Post-acquisition, Keppel DC REIT will own 100% of both KDC SGP 3 and KDC SGP 4, further consolidating its presence in Singapore’s prime data centre market.
• Strategically Located Assets: Both assets are located in Tampines, a major data centre hub in Singapore, attracting hyperscale clients with robust connectivity and infrastructure.
• Accretive Transaction: The acquisitions are projected to be immediately accretive to Distribution per Unit (DPU), with FY2024 DPU expected to rise by 0.8% on a pro forma basis.
• Aggregate Purchase Consideration: The total outlay for the transaction is approximately S\$53.9 million, to be funded by proceeds from a recent preferential offering.
• Interested Person Transaction: As the transaction involves the Sponsor, it is classified as an Interested Person Transaction under SGX rules, but does not require unitholder approval.

Detailed Transaction Overview

Background and Rationale

Keppel DC REIT is acquiring the remaining interests in two of its flagship Singapore data centres from its Sponsor’s subsidiary, Keppel Data Centres Holding Pte. Ltd. Specifically, the REIT will acquire the remaining 10% in KDC SGP 3 LLP and 1% in KDC SGP 4 LLP. These two properties are highly sought after due to their strategic location in Tampines, excellent connectivity, and strong tenant profiles anchored by hyperscale clients.

Asset Information

• KDC SGP 3: Completed in 2015, this five-storey, carrier-neutral data centre offers 54,925 sq ft of lettable area, with a 100% occupancy rate as of 30 September 2025. It is anchored by two major clients, with a weighted average lease expiry (WALE) of approximately 3.0 years. The property is certified with BCA Green Mark (Platinum) and LEED Gold awards.
• KDC SGP 4: Completed in 2018, this five-storey facility provides 84,544 sq ft of lettable area and is 94.5% contracted, anchored by four clients with a WALE of about 4.4 years. It also holds top environmental certifications (BCA Green Mark Platinum, LEED Gold).

Valuation and Purchase Consideration

The agreed property values for the acquisitions are S\$434 million for KDC SGP 3 and S\$585.85 million for KDC SGP 4 (both on 100% basis). These prices are in line with or at a slight premium/discount to independent valuations:

• KDC SGP 3: 2.7% discount to Savills valuation, 2.8% premium to Colliers valuation.
• KDC SGP 4: 0.7% premium to Savills, 0.7% discount to Colliers.

The total purchase consideration is approximately S\$50.5 million, based on the net asset values and the proportionate interests acquired, plus customary adjustments. The total acquisition outlay, including fees, expenses, and an acquisition fee of approximately S\$0.5 million (payable in units), is estimated at S\$53.9 million.

Funding Structure

The acquisitions will be financed using part of the S\$404.5 million raised in the recent preferential offering. Specifically, S\$53.4 million originally earmarked for debt repayment will be reallocated. This move maintains a healthy balance sheet, with aggregate leverage expected to improve from 29.8% to 29.5% post-acquisition, and ample debt headroom of S\$944 million remaining for future opportunities.

Portfolio Impact

• Assets under management (AUM) will increase by approximately 3.5%, from S\$5.7 billion to S\$5.9 billion.
• The proportion of Singapore assets in the portfolio will rise from 57.8% to 58.8% of AUM.
• Contribution from hyperscale clients will increase from 69.3% to 69.5% of rental income, further enhancing portfolio stability.

Pro Forma Financial Effects

Note: Aggregate leverage may rise to 33.5% after accounting for the Preferential Offering and other recent acquisitions.

Regulatory and Interested Person Transaction Details

• The vendor is a wholly owned subsidiary of the Sponsor, which is also a controlling unitholder and shareholder of the REIT Manager. This makes the acquisition an Interested Person Transaction under SGX rules.
• The aggregate value of all interested person transactions for the year, including this deal, is about S\$119.4 million, or 3.5% of the latest audited NTA/NAV—thus, an announcement is required but unitholder approval is not needed.
• The REIT’s Audit and Risk Committee has assessed the terms as fair, on normal commercial terms, and not prejudicial to minority unitholders.

Key Shareholder and Director Interests

• Temasek Holdings (Private) Limited holds a significant indirect stake (20.42%) in Keppel DC REIT via various subsidiaries.
• Keppel Ltd. and related entities collectively hold and control substantial interests in the REIT.
• Directors of the REIT Manager and Sponsor hold both units in the REIT and shares in Keppel Ltd., details of which are disclosed for transparency.

Implications for Investors

This acquisition is likely to be price-sensitive for Keppel DC REIT. The move is immediately DPU-accretive, increases the REIT’s exposure to Singapore’s robust and growing data centre market, and strengthens its portfolio with high-quality, environmentally certified assets. It leverages the REIT’s strong capital base while keeping leverage at prudent levels. The transaction also underscores the Sponsor’s ongoing support and alignment of interest with unitholders.

Investors should note that while this is an Interested Person Transaction, it is on normal commercial terms and does not require unitholder approval. The transaction is expected to further enhance the REIT’s attractiveness as a high-quality, stable income-generating vehicle with solid growth prospects.

Conclusion

Keppel DC REIT’s acquisition of the remaining interests in KDC SGP 3 and KDC SGP 4 positions it as one of the largest owners of stabilised data centre assets in Singapore. With increased exposure to hyperscale clients, higher AUM, and accretive financial effects, this development could positively impact the share price and is highly relevant for existing and prospective investors.

Disclaimer: This article does not constitute investment advice. It is based on publicly available information and may contain forward-looking statements subject to risks and uncertainties. Investors are advised to conduct their own due diligence or seek professional advice before making investment decisions. Past performance is not indicative of future results. The value of investments and the income derived from them may fall as well as rise.

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