Keppel DC REIT’s S$404.5m Preferential Offering: What It Means & How to Decide
For existing unitholders evaluating whether to subscribe, including a worked example for someone holding 10,000 units.
Quick Summary
- Offer size: ~S$404.5 million via a fully underwritten, non-renounceable preferential offering.
- Pricing: S$2.24 per new unit (about 5.2% discount to reference VWAP of S$2.3622).
- Allotment ratio: 80 new units for every 1,000 units held (fractions disregarded).
- Use of proceeds: Partial funding of a hyperscale data centre acquisition in Inzai (Japan), AEI, lease extension, and debt repayment.
- DPU impact: Management guides to pro forma accretion of about 3.4% (FY2024 basis) if fully deployed as planned.
- Leverage: Pro forma aggregate leverage around 33.5% post-deployment.
- Listing of new units: expected around 22 October 2025 (see detailed timeline below).
Why the REIT Is Raising Capital
The raise supports a deepening of exposure to Japan’s hyperscale data centre market and funds balance-sheet initiatives. Management expects the deployment to be DPU-accretive, while keeping leverage at a prudent level to preserve financial flexibility.
Use of Proceeds (Breakdown)
| Purpose |
Amount (S$ m) |
Share of Total |
| Partial financing of ~98.47% effective interest in Inzai (Japan) hyperscale DC |
229.8 |
56.8% |
| Asset Enhancement Initiatives (Keppel DC Singapore 8) |
53.9 |
13.3% |
| 30-year land lease extension (Keppel DC Singapore 1) |
10.7 |
2.7% |
| Debt repayment (incl. past investment funding) |
104.5 |
25.8% |
| Estimated fees & expenses |
5.6 |
1.4% |
Note: Any remaining proceeds may be used for general corporate/working capital. If the acquisition or AEI does not proceed, proceeds may be redeployed (e.g., to debt repayment or future acquisitions/capex).
Offer Structure & Eligibility
- Type: Non-renounceable (you cannot sell or transfer the entitlement).
- Excess applications: Allowed, but allocation is discretionary; directors/substantial shareholders rank last for odd-lot rounding and excess allocation.
- Eligibility: Generally for unitholders with Singapore addresses (or who update to a SG address at least three market days before record date) and certain qualified investors in permitted jurisdictions.
Timeline (Key Dates)
| Event |
Date / Time (SGT) |
| Last “cum” preferential offering trading |
Fri, 26 Sep 2025 |
| Units trade “ex” preferential offering |
Mon, 29 Sep 2025 |
| Record Date for eligibility |
Tue, 30 Sep 2025, 5:00 p.m. |
| Opening of preferential offering |
Fri, 3 Oct 2025, 9:00 a.m. |
| Closing for acceptance/payment |
Mon, 13 Oct 2025, 5:30 p.m. (9:30 p.m. for ATMs) |
| Listing & trading of new units |
Wed, 22 Oct 2025, 9:00 a.m. |
Pros & Cons for Investors
Pros
- DPU accretion expected on a pro forma basis, if proceeds are deployed as outlined.
- Strategic asset in a prime Tokyo DC cluster (Inzai), aligned with long-term hyperscale/AI demand.
- Prudent leverage targeted (~33.5% post-deployment) offers flexibility for future growth.
- Underwritten offering with sponsor alignment; major shareholders intend to subscribe to their full entitlements.
- Participation discount: S$2.24 issue price provides value vs the reference VWAP; you may also apply for excess units (not guaranteed).
- Potential liquidity uplift as issued units increase the free float and trading activity.
Cons / Risks
- Non-renounceable: If you choose not to subscribe, you cannot monetise the entitlement; you accept dilution.
- FX & rates sensitivity: More Japan exposure introduces JPY/SGD translation risk and hedging considerations.
- Execution & timing: Completion, ramp-up, and AEI timelines can affect realised accretion and cash flow timing.
- Sector dynamics: Data centre returns hinge on power, tenant mix, lease terms, and cap-rate movements.
Worked Example: Investor With 10,000 Existing Units
Assumptions: You hold 10,000 units before the offer. Offer price is S$2.24 per new unit. Allotment ratio is 80-for-1,000. Reference VWAP is S$2.3622.
1) Entitlement & Cash Outlay
- Entitled new units: 10,000 × (80/1,000) = 800 units
- Cash needed: 800 × S$2.24 = S$1,792
- Total units after subscribing: 10,000 + 800 = 10,800 units
2) Theoretical Ex-Rights Price (TERP)
Using the reference VWAP (S$2.3622) and offer price (S$2.24):
TERP = (10,000 × 2.3622 + 800 × 2.24) / 10,800 ≈ S$2.3531
3) Dilution If You Do Not Subscribe
- Your 10,000 units would mark to ~S$2.3531 post-offer.
- Because the entitlement is non-renounceable, there’s a small loss in theoretical value vs pre-offer, plus your ownership percentage shrinks relative to a subscriber.
4) New Average Cost If You Subscribe
If your current average cost is AC, then after subscribing fully:
New Avg Cost = (10,000 × AC + 1,792) / 10,800
| Current Avg Cost (AC) |
New Avg Cost (after subscribing 800 units @ S$2.24) |
| S$2.20 |
S$2.2030 |
| S$2.30 |
S$2.2956 |
| S$2.40 |
S$2.3881 |
| S$2.60 |
S$2.5733 |
5) What About Applying for Excess?
You may apply for excess units to lower your average cost further (allocation is not guaranteed). This makes most sense when the market price trades meaningfully above S$2.24 during the offer window.
Should You Subscribe?
Subscribe your full entitlement if you are a long-term income investor comfortable with increased Japan exposure and FX hedging, and if the trading price stays at/above S$2.24 during the offer window.
Consider partial or skip if you need near-term liquidity, are cautious about JPY/SGD risk, or if the market price trades below S$2.24 (which would diminish the benefit of subscribing, especially for excess).
This article is for information only and is not financial advice. Always consider your objectives, risk tolerance, and consult a licensed adviser if needed.
