Singapore’s Keppel is acquiring a majority stake in two data centers in Tokyo, Japan.

Keppel DC REIT and Keppel Ltd. this week announced that they have indirectly entered into agreements with unrelated third-party sellers to collectively acquire 90 percent effective interests in facilities now known as Tokyo Data Centre 4 and Tokyo Data Centre 5, two freehold, hyperscale fully-fitted (colocation) facilities located in Inzai City.

The deal (on a 100 percent basis) is valued at JPY 190 billion ($1.197bn).

Upon completion, Keppel DC REIT will hold an 88.62 percent effective interest in each facility. Keppel Ltd., through its interest in Keppel Japan KK, will hold a 1.38 percent effective interest.

The existing operator, an unnamed “established global data center owner and operator,” will retain a 10 percent interest in each data center.

The deals will be largely funded via funds from a new private placement.

Tokyo Data Centre 4 and Tokyo Data Centre 5 total a gross floor area of 169,590 sq ft (15,755 sqm) and 233,550 sq ft (21,698 sqm) respectively, with an approximate net lettable area of 62,135 sq ft (5,773 sqm) and 101,160 sq ft (9,398 sqm) respectively. Tokyo 4 was completed in 2021, Tokyo 5 in 2024.

Both fully occupied, the weighted average lease expiry (WALE) is approximately 4.5 years for Tokyo Data Centre 4 and 10.6 years for Tokyo Data Centre 5. Of the four investment-grade clients across the two data centers (three in building 4 and two in building 5), three are new to Keppel DC REIT’s portfolio

Loh Hwee Long, CEO of the manager of Keppel DC REIT, said: “This acquisition demonstrates our disciplined approach to acquiring quality assets with multiple avenues for value creation. In addition to immediate DPU accretion, Tokyo Data Centre 4 and 5 provide embedded growth through contracted rent escalators and meaningful potential reversion opportunities, while further deepening our exposure to the Japan data center market.

"The acquisition also expands our network of institutional and operating partners, strengthening our ability to source and access future investment opportunities globally. Together, these will support our strategy of building a resilient portfolio that can deliver sustainable long-term growth and returns across market cycles.”

This week also saw Keppel DC REIT announce the successful completion of a new private placement, which was upsized to S$625 million (US$492.76m) from S$600 million (US$472.05m).

Approximately S$615.8 million (US$485.51m) will go towards partially financing the acquisition. The rest will go towards fees and general corporate and/or working capital purposes.

DBS Bank Ltd., Oversea-Chinese Banking Corporation Limited, Jefferies Singapore Limited, and United Overseas Bank Limited were the joint bookrunners and underwriters for the Private Placement.

Keppel DC REIT was listed on the Singapore Exchange in December 2014 as the first pure-play data center REIT in Asia. The company is managed by Keppel DC REIT Management Pte. Ltd. and sponsored by Keppel.

The company’s portfolio comprises a mix of fully-fitted (colocation/single tenant) and shell and core facilities across Singapore, Australia, China, Japan, Malaysia, Germany, Ireland, Italy, the Netherlands, and the UK.

The company currently owns two other data centers in Tokyo; Tokyo Data Centre 1 and Tokyo Data Centre 3. The latter was acquired last year.

The Inzai area of Tokyo is one of the city's data center hotspots. Operators including STT GDC, Airtrunk, Digital Realty, and Colt have a presence in the region.