‘Desk’ co-living development (1) Keppel has announced its decision to divest its data centre joint venture (JV) to Keppel DC REIT (KDC REIT) for a total gross divestment price of $1.38 billion. As per the deal, KDC REIT will acquire the two fully contracted data centres, Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8), from the JV, which is owned 60% by Keppel’s connectivity division and 40% by Cuscaden Peak Investments Private Limited. The data centres are currently contracted to global hyperscalers from across the cloud services, internet enterprise, and telecommunications sectors on a colocation basis. The development of these data centres was funded by the JV, Keppel’s private fund Alpha Data Centre Fund and its parallel fund (ADCF), as well as co-investors. Upon completion of the proposed transaction, KDC REIT will fully own KDC SGP 7 and KDC SGP 8, with Keppel continuing to serve as the operator and facility manager. Additionally, KDC REIT will also acquire an initial 49% interest in the JV and subscribe for two new classes of securities issued by the Keppel JV for up to $1.03 billion, entitling the REIT to 99.49% of the economic interest from both data centres. KDC REIT will also be given a call option to acquire the remaining 51% stake in the Keppel JV from Keppel by the second half of 2025, which will provide the REIT with an economic interest of 0.51% in the data centres. KDC REIT will also pay an additional $350 million to the JV’s shareholders, ADCF and co-investors, if the campus receives approvals to extend its land tenure lease to 2050. The proposed transaction is expected to be accretive to KDC REIT’s distribution per unit (DPU) by 8.1% and expand its assets under management (AUM) by 36% to $5.2 billion. Keppel’s share of the divestment will be around $280 million, which includes the estimated consideration for Keppel’s 51% stake in the JV and the additional consideration to be paid if the campus is granted a 10-year land tenure lease extension. The JV also owns a vacant land plot earmarked for a third data centre, which is not part of the transaction and will be sub-leased to Keppel’s private funds, Keppel DC Fund II and the upcoming Keppel DC Fund III, with Keppel aiming to develop the third data centre in the campus, KDC SGP 9, with its two data centre private funds. Keppel’s CEO of the connectivity division, Manjot Singh Mann, says that the deal highlights the company’s strengths as a global asset manager and operator to structure deals that deliver strong value creation for its private funds and REIT. He also adds that Keppel’s integrated ecosystem provides access to power and other critical resources, technology know-how, and strong relationships with hyperscalers, making the company well-positioned for success in the data centre business. KDC REIT’s CEO of the manager, Loh Hwee Long, says that the REIT is “excited” to embark on this “landmark deal” as it celebrates its 10th anniversary, having launched its initial public offering (IPO) in 2014. He adds that the acquisition will deliver strong positive cash flows and be immediately DPU accretive, enhancing the portfolio’s income resilience and allowing the REIT to capture potential upside from rental uplifts and capacity expansion. The inclusion of these assets further cements Keppel DC REIT’s market position as one of the largest owners of stabilized data centers in Singapore, where demand is strong and supply tight. The transaction will be executed in stages and is expected to be completed by the end of 2025.
The importance of location cannot be overstated in the realm of real estate investment, a truth that holds particularly true in Singapore. The vicinity of a property can play a significant role in its value, making it a vital consideration. This holds even more weight for condos, as their placement in prime areas or proximity to essential amenities such as top-rated schools, shopping centers, and public transportation hubs can greatly impact their potential for value appreciation. This trend is especially prevalent in highly sought-after locations like Orchard Road, Marina Bay, and the Central Business District (CBD), where property values consistently show an upward trajectory. Families, in particular, prioritize living near reputable educational institutions, heightening the desirability of condos in these areas for investment. Hence, when contemplating investing in a Singaporean condo, thoroughly evaluating its location is vital. This is because the location of a condo has a significant influence on its value, making it a crucial aspect for potential investors to carefully consider.