Keppel DC REIT Completes Strategic Acquisitions and Announces Use of Preferential Offering Proceeds

Key Highlights

• Completion of Acquisitions: Keppel DC REIT has completed the acquisition of the remaining interests in Keppel DC Singapore 3 and Keppel DC Singapore 4, resulting in 100% ownership of both data centres.
• Full Utilisation of Preferential Offering Proceeds: Gross proceeds of approximately S\$355.5 million from the recent Preferential Offering have been allocated to several strategic initiatives, including acquisitions, asset enhancement, land lease extensions, and debt repayment.

Detailed Announcement

Keppel DC REIT Management Pte. Ltd. (“the Manager”) has announced the successful completion of the acquisition of the remaining interests in the data centres known as Keppel DC Singapore 3 and Keppel DC Singapore 4. With this transaction, Keppel DC REIT now holds a full 100.0% ownership in each of these strategically important assets.

Preferential Offering Proceeds Allocation

The Preferential Offering, which raised gross proceeds of approximately S\$355.5 million, has been utilised as follows:

• Acquisition of 98.47% Effective Interest in Inzai City, Japan Data Centre: S\$229.8 million fully utilised.
• Asset Enhancement for Keppel DC Singapore 8: S\$6.3 million utilised (out of S\$53.9 million), with S\$47.6 million pending utilisation.
• 30-Year Land Lease Extension for Keppel DC Singapore 1: S\$10.7 million fully utilised.
• Acquisition of Remaining Stakes in Keppel DC Singapore 3 and 4: S\$53.4 million utilised (reallocated from original debt repayment allocation).
• Debt Repayment (including prior investment-related debt): S\$51.1 million utilised (original allocation reduced from S\$104.5 million due to reallocation above).
• Fees and Expenses Related to the Preferential Offering: S\$4.2 million utilised (out of S\$5.6 million), with S\$1.4 million pending utilisation.

The remaining S\$49.0 million from the Preferential Offering is pending utilisation, primarily earmarked for asset enhancement and fees/expenses. The Manager will provide further updates as and when these funds are materially used.

Points for Shareholders and Potential Share Price Sensitivity

• Strategic Consolidation: The completion of the acquisition of the remaining interests in two major Singapore data centres significantly enhances Keppel DC REIT’s portfolio and future income potential. Full ownership of these assets may positively impact recurring income and provide greater operational flexibility.
• Reallocation of Funds: S\$53.4 million originally intended for debt repayment has been redirected to fund the acquisitions. This change, while a deviation from the original plan, aligns with the intent to create debt headroom for future growth, and may be regarded as a prudent capital management decision.
• Pending Utilisation of Funds: Investors should note that S\$47.6 million earmarked for asset enhancement at Keppel DC Singapore 8 and S\$1.4 million for fees are yet to be deployed. The timing and effectiveness of these enhancements could further influence the REIT’s performance and future distributions.
• Potential Price Impact: The full consolidation of key assets, disciplined use of proceeds, and future asset enhancement initiatives represent material developments that could influence investor sentiment and share price performance.

Forward-Looking Statements and Risk Factors

The Manager has cautioned that this announcement may contain forward-looking statements subject to various risks and uncertainties, including but not limited to economic conditions, interest rate changes, competition, and policy changes. Past performance is not indicative of future results, and the value of units may rise or fall.

Conclusion

The completion of the acquisitions and strategic allocation of capital represent significant milestones for Keppel DC REIT. These developments are likely to be closely watched by investors and could have a material impact on the REIT’s future financial performance and unit price.

Disclaimer: This article is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with their financial advisors before making investment decisions. The value of units and income derived from them may fall as well as rise, and there are inherent investment risks, including possible loss of principal. Past performance is not necessarily indicative of future performance.

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