Keppel is to buy out two data centers it operates in Singapore.
Keppel DC REIT this week announced the proposed acquisition of two hyperscale data centers at the Keppel Data Centre Campus in Singapore from a joint venture owned by its parent company.
Located at Genting Lane, Keppel DC Singapore 7 and Keppel DC Singapore 8 are 100 percent contracted to global hyperscalers on a colocation basis. Keppel will continue to operate and manage the two facilities post-acquisition.
The deal would be for S$1.03 billion (US$769 m), paid for in a combination of equity (via private placement, preferential offering, and sponsor subscription) and debt. The deal is set to close by the end of 2025.
Loh Hwee Long, CEO of Keppel DC REIT Management Pte. Ltd., said: “In Keppel DC REIT’s 10th anniversary year, we are excited to embark on this landmark deal to acquire two next-generation AI-ready data centers situated within a campus. The proposed acquisition will deliver strong positive cash flows and be immediately DPU accretive.
"These assets will not only enhance our portfolio’s income resilience but also allow us to capture potential upside from rental uplifts and capacity expansion. Their inclusion further solidifies Keppel DC REIT’s market position as one of the largest owners of stabilized data centers in Singapore, where there is strong demand and tight supply.”
Singapore 7 hosts four clients and totals 72,925 sq ft (6,775 sqm) of lettable space. Singapore 8 hosts three clients across 77,530 sq ft (7,200 sqm) of lettable space. The latter facility is partially fitted and occupied with the first tenants arriving in August; it is due to be fully occupied by Q3 2025.
The site is currently owned by a 60:40 joint venture between Keppel Ltd and real estate investment trust manager Cuscaden Peak Investments. The construction of KDC SGP 7 and KDC SGP 8 was funded by the Keppel JV, Keppel’s private fund Alpha Data Centre Fund, its parallel fund (collectively, ADCF), as well as co-investors.
The campus includes a vacant land plot earmarked for a third data center, which has been carved out from the proposed transaction. That plot will be sub-leased to two private funds, Keppel DC Fund II and the upcoming Keppel DC Fund III, where Keppel will have the opportunity to develop Keppel DC Singapore 9.
Manjot Singh Mann, CEO of connectivity at Keppel, said: “The injection of KDC SGP 7 and KDC SGP 8 into Keppel DC REIT underscores our strengths as a global asset manager and operator to structure deals with compelling outcomes and strong value creation for the company, our private funds, and REIT. Our integrated ecosystem provides access to power and other critical resources, technology know-how, and strong customer relationships with hyperscalers worldwide, which are crucial for success in the data center business.
"With the ability to invest with multiple pools of capital, Keppel can develop a robust pipeline of AI-ready data centers that offer effective solutions for customers and attractive investments for our funds and REIT.”
Keppel DC REIT will acquire an initial 49 percent interest in the Keppel JV (entitling it to 99.49 percent of the economic interest of the two facilities). Keppel DC REIT will also be granted a call option, which it expects to exercise sometime in 2H 2025, to acquire the remaining 51 percent stake in the Keppel JV from Keppel.
As part of the proposed transaction, Keppel DC REIT shall pay an additional S$350 million (US$261m) to the Keppel JV’s shareholders, ADCF, and co-investors, should a 10-year land tenure lease extension to 2050 be approved for the campus by the relevant authorities.
Cuscaden Peak (formerly known as Singapore Press Holdings Limited) is owned by a consortium of three shareholders - Hotel Properties Limited; Temasek-owned Mapletree Investments; and Temasek-owned CLA Real Estate Holdings. Temasek also owns a significant portion of Keppel.
