Keppel DC REIT and Keppel Ltd. (Keppel) have indirectly entered into agreements with unrelated third-party vendors, to acquire a 100% interest in Tokyo Data Centre 3, a freehold, newly built hyperscale data centre located in Inzai City, Greater Tokyo for JPY 82.1 billion (approximately S$707.0 million).
The total purchase consideration represents an approximate 1.1% discount to the asset’s valuation of JPY 83.0 billion (approximately S$714.7 million). Keppel DC REIT will have a 98.47% effective interest in Tokyo Data Centre 3, while the remaining 1.53% effective interest will be held by Keppel.
Tokyo Data Centre 3 is fully contracted to a leading global hyperscaler for 15 years with built-in annual rent escalation. This offers greater cash flow resilience compared to the predominantly fixed-rent contracts in the Japanese data centre market.
The acquisition would add a second data centre asset in Japan to Keppel DC REIT’s portfolio, strengthening its presence in the largest data centre hub in Asia Pacific (excluding China). Japan continues to experience strong demand while new supply remains constrained due to power and construction limitations.
Strategically situated in Inzai City, one of the most established data centre clusters in Japan, Tokyo Data Centre 3 offers robust network connectivity and low latency to Central Tokyo. The five-storey data centre is built to Tier III-equivalent specifications and the latest seismic standards with a base isolation system. The facility is managed by an established global third-party operator with over two decades of data centre experience and a proven track record.
Mr Loh Hwee Long, CEO of the Manager of Keppel DC REIT, said, “The accretive acquisition of Tokyo Data Centre 3 is aligned with our value creation strategy to pursue hyperscale opportunities in established data centre hubs. The favourable demand-supply dynamics for data centres in Japan and the country’s strategic position as an interconnect location between Asia and the Americas make it a compelling market for long-term growth. We are pleased to expand our presence in Japan with another high-quality asset that will enhance our portfolio and strengthen our income diversification.”
The acquisition of Tokyo Data Centre 3 is expected to be immediately DPU-accretive. On a pro forma basis, if the acquisition were completed on 1 January 2024, DPU for FY 2024 would increase by 2.8% from 9.451 cents to 9.712 cents.
Following the completion of the acquisition which is expected by end 2025, Tokyo Data Centre 3 will improve Keppel DC REIT’s portfolio occupancy from 95.8% to 95.9% and increase the weighted average lease expiry from 6.9 years to 7.2 years. It will also strengthen portfolio resilience and diversification by increasing the proportion of rental income derived from another leading global hyperscaler. Keppel DC REIT’s assets under management will further increase to $5.7 billion with 25 data centres across 10 countries in Asia Pacific and Europe.
