Keppel Divest Genting Lane Data Centres Kdc Reit 138 Bil
Keppel, a leading global company, recently announced its plans to sell its data centre joint venture (JV) to Keppel DC REIT (KDC REIT) for a total amount of $1.38 billion. The JV, which is 60% owned by Keppel’s connectivity division and 40% owned by Cuscaden Peak Investments Private Limited, owns the Keppel Data Centre Campus at Genting Lane in Singapore. The campus is home to two fully contracted data centres, Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8), both of which are 100% contracted to global hyperscalers from the cloud services, internet enterprise, and telecommunications sectors.
The funding for the construction of KDC SGP 7 and KDC SGP 8 was provided by the JV, Keppel’s private fund Alpha Data Centre Fund, its parallel fund (ADCF), and co-investors. Upon completion of the planned transaction, KDC REIT will fully own KDC SGP 7 and KDC SGP 8, with Keppel continuing to serve as the operator and facility manager.
KDC REIT will acquire a 49% interest in the JV and subscribe for two new classes of securities issued by the Keppel JV for up to $1.03 billion. This will entitle the REIT to 99.49% of the economic interest from both data centres. KDC REIT will also have a call option to acquire the remaining 51% stake in the Keppel JV from Keppel, which it plans to exercise in the second half of 2025. The remaining stake represents an economic interest of 0.51% in the data centres.
As part of the proposed transaction, KDC REIT will pay an additional $350 million to ADCF and co-investors if the campus receives approvals to extend its land tenure lease to 2050. The acquisition is expected to be accretive to KDC REIT’s distribution per unit (DPU) by 8.1% and will expand its assets under management (AUM) by 36% to $5.2 billion, with 25 data centres across Asia Pacific and Europe.
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Keppel’s share of the divestment will be approximately $280 million, which includes the estimated consideration for its 51% stake in the JV and an additional consideration if the campus is granted a 10-year land tenure lease extension. The JV also has a vacant land plot that will be sub-leased to Keppel’s private funds for the development of a third data centre, KDC SGP 9.
Manjot Singh Mann, CEO of Keppel’s connectivity division, believes that the injection of KDC SGP 7 and KDC SGP 8 into KDC REIT highlights the company’s strengths as a global asset manager and operator that can structure deals with compelling outcomes and strong value creation for its private funds and REIT. He adds that Keppel’s integrated ecosystem gives access to power and other critical resources, technology know-how, and strong customer relationships with hyperscalers worldwide, making it well-positioned for success in the data centre business.
Loh Hwee Long, CEO of KDC REIT’s manager, expresses excitement over this landmark deal as the REIT celebrates its 10th anniversary since its initial public offering in 2014. He believes that the proposed acquisition will bring in strong positive cash flows and be immediately accretive to DPU. He also mentions that the inclusion of these assets will enhance the REIT’s portfolio’s income resilience and allow for potential upside from rental uplifts and capacity expansion. The transaction is expected to be completed in stages by the end of 2025.
