Keppel DC Reit acquires remaining stake in 2 data centres from sponsor Keppel for S$8.4 million 

[SINGAPORE] The manager of Keppel DC Real Estate Investment Trust (Reit) has acquired the remaining 51 per cent interest in two artificial intelligence-ready hyperscale data centres in Singapore from sponsor Keppel for up to S$8.4 million. 

In a bourse filing on Wednesday (Sep 3), the manager said the transaction was completed through the exercise of a call option with Keppel’s indirect wholly owned subsidiary. This gives the Reit full ownership of Memphis 1, the entity holding the two data centres.  

The consideration of up to S$8.4 million is subject to completion adjustments. 

Of this amount, about S$6.6 million is payable once the call option is completed. The sum is based on 51 per cent of Memphis 1’s net asset value at the time of completion, and includes the outstanding principal and accrued interest of the notes issued by it.

The remaining amount – up to about S$1.8 million – is payable following the completion of the call option, should there be a 10-year lease extension on the properties under the master agreement. 

The manager said the price was negotiated on a willing-buyer, willing-seller basis, using a fixed property value for the two data centres without assuming any lease extension. 

Two separate independent valuations put the combined market value of the properties as at May 1 at S$1.047 billion and S$1.064 billion, respectively. The average of the two valuations is S$1.056 billion, higher than the sum of the agreed property value of S$1.03 billion and the S$16.3 million paid as land premium. 

This resulting amount of S$1.046 billion was used to fix the call option property price, since it was the lower figure. 

The S$8.4 million consideration will be funded by debt and/or existing cash, said the manager. The acquisition is not expected to materially affect the trust’s net asset value or distribution per unit for the financial year ending Dec 31. 

Units of Keppel DC Reit closed at S$2.32 on Wednesday, down 1.3 per cent or S$0.03, before the announcement. Keppel shares closed 0.7 per cent or S$0.06 lower at S$8.64.