Detailed Analysis
Strategic Lease Extension: The granted 10-year lease extension for the Keppel Data Centre Campus is a pivotal development for both Keppel Ltd. and Keppel DC REIT. The extension, which takes land tenure to 2050, directly addresses concerns about asset lifespan and unlocks significant capital for the joint venture. The transaction is a key milestone in the divestment of Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8), both hyperscale, AI-ready data centres, to Keppel DC REIT.
Financial Impact and Payment Details: The final payment of S\$350 million is triggered by the lease extension approval, representing a material cash flow to the Keppel JV. Keppel Ltd.’s effective share is approximately S\$70.9 million, an important figure for shareholders tracking direct financial impact. The overall transaction was valued at S\$1.38 billion.
Portfolio Growth and Upward Valuation: Following the lease extension and the acquisition of remaining interests in Keppel DC Singapore 3 and 4, Keppel DC REIT’s AUM will increase from S\$5.7 billion to S\$6.2 billion, an 8.5% uplift. This includes not only the new assets but also a revaluation of KDC SGP 7 and 8, reflecting their extended tenure and enhanced revenue potential.
Asset Enhancement Initiatives (AEI): The extended tenure gives Keppel DC REIT flexibility to execute AEI, such as fitting out unused space at KDC SGP 8 into data halls. These initiatives are projected to drive additional revenue and valuation uplift, benefiting both the REIT and its investors.
Development Pipeline: Keppel will use the extended lease to advance development of KDC SGP 9, the third data centre on campus, via Keppel Data Centre Funds II and III. This indicates continued expansion and future growth in AI-ready infrastructure.
Market Position and Resilience: CEO commentary highlights strategic value creation: Keppel mobilises capital, develops and de-risks assets, and unlocks value for shareholders and limited partners. The extension strengthens Keppel DC REIT’s competitive position in Singapore’s highly supply-constrained market, supporting client retention and consistent high-quality cash flows.
Potential Share Price Impact: This announcement is likely to be price-sensitive for several reasons:
- Material cash payment (S\$350 million) to the sellers, with a direct financial benefit to Keppel Ltd.
- Significant AUM growth for Keppel DC REIT, enhancing both scale and resilience.
- Improved asset tenure and flexibility for value-creating AEI, which can result in higher rental yields and asset valuations.
- Expansion of development pipeline and market position, particularly in the AI-ready hyperscale segment.
Investors should monitor subsequent SGX announcements for detailed financial impact and any updates on AEI execution or leasing activity.
Contact Information
Media Relations: Ms Frances Teh (Director, Corporate Communications, Keppel Ltd., Tel: (65) 6413 6437, Email: [email protected])
Investor Relations: Ms Lillian Ying (Manager, Investor Relations, Keppel Ltd., Tel: (65) 6413 6475, Email: [email protected])
Keppel DC REIT IR: Ms Renee Goh (Senior Manager, Investor Relations, Keppel Ltd., Tel: (65) 6803 1679, Email: [email protected])
Disclaimer
This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any securities. Please consult your professional advisor before making investment decisions. The information contained herein is based on publicly available sources and company announcements as at 26 December 2025.
View Keppel DC Reit Historical chart here
