Keppel doubles down on Tokyo with $1.5b data centre buy

The data centres are fully leased to four investment-grade internet enterprises.

Keppel DC REIT and Keppel Ltd. have acquired 90% effective interests in Tokyo Data Centre 4 and Tokyo Data Centre 5, two freehold hyperscale colocation facilities in Greater Tokyo.

The aggregate purchase price on a 100% basis is $1.5b (JPY190b), a 2.1% discount to the assets' $1.58b (JPY194b) valuation.

Keppel DC REIT will pay $1.372b (JPY168b) for its 88.62% effective interest, whilst Keppel Ltd. takes a 1.38% stake through Keppel Japan KK. The existing operator retains the remaining 10% in each asset.

Both data centres are fully leased to four investment-grade internet enterprises and information technology services clients, three of which are new to Keppel DC REIT's client base.

Contracted average annual rent escalation is approximately 2.8%, with in-place rents estimated to be at least 30% below market. Weighted average lease expiry is 4.5 years for Tokyo Data Centre 4 and 10.6 years for Tokyo Data Centre 5.

Following completion, Japan's share of portfolio rental income will jump from approximately 9% to approximately 23%, whilst Singapore remains the anchor market at roughly 60% of rental income.

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