Singapore-based Keppel infrastructure company Keppel Corporation is considering forming a Real Estate Investment Trust (REIT) for its data center business to operate under, which will be listed on the Singapore Exchange Securities Trading Limited (SGX-ST).
The company’s data center business currently operates under the name of Keppel Data Centres Holding.
It owns and operates more than 46,500 sq m of data center space in Singapore used for colocation and other purposes, including the Keppel Datahub development with two Tier III facilities and Keppel Digihub Tier III facilities.
It also operates the Securus Gore Hill Data Center in Sydney, Australia, and the Almere Data Centre in Amsterdam built with the Shariah-compliant Securus Data Property Fund it established with AEP Investment Management as well as data centers in Malaysia.
The company said it is currently exploring the REIT option, and which properties it will place under the fund.
“The details of the proposed transaction are currently still under review,” it said.
Keppel Telecommunications & Transportation – the Keppel division which its data center business falls under – said the establishment of the REIT will be subject to market conditions, regulatory and other approvals and definitive agreements by relative parties among other areas.
The data center operator is just one of a number of operators looking into the benefits of REIT status, which provides shareholders with regular distributions from higher earnings and the company with what many see as a favourable taxation structure, with lower taxes.
Global player Equinix announced in September 2012 that it was making moves to become a REIT.
US-based Iron Mountain is also considering moving to REIT status.
Efforts by these US-based data center operators, however, have been delayed due to evaluations into the eligibility of these companies to take on the real-estate status by the US Internal Revenue Service, due to their non-traditional real estate nature.
Wholesale data center operators Digital Realty Trust and DuPont Fabros Technology have operated as REITS since inception. The difference in their operations with those of traditional colocation players comes with the additional services offered on top of real estate inside the data center.