Keppel Divest Genting Lane Data Centres Kdc Reit 138 Bil
On November 19, Keppel announced its decision to sell its data centre joint venture (JV) to Keppel DC REIT (KDC REIT) for a gross divestment price of $1.38 billion.
The JV, which is mostly owned (60%) by Keppel’s connectivity division and partially owned (40%) by Cuscaden Peak Investments Private Limited, owns the Keppel Data Centre Campus at Genting Lane in Singapore. The campus includes two completed and fully contracted data centers, Keppel DC Singapore 7 (KDC SGP 7) and Keppel DC Singapore 8 (KDC SGP 8). Both data centers are fully leased to global hyperscalers from the cloud services, internet enterprise, and telecommunications industries on a colocation basis.
The construction of KDC SGP 7 and KDC SGP 8 was funded by the JV, Keppel’s private fund Alpha Data Centre Fund and its parallel fund (ADCF), as well as co-investors.
After the proposed transaction, KDC REIT will fully own KDC SGP 7 and KDC SGP 8. Keppel will continue to serve as the operator and facility manager for the two data centers.
KDC REIT will acquire an initial 49% stake in the JV and subscribe for two new classes of securities issued by the Keppel JV for up to $1.03 billion, giving the REIT 99.49% economic interest in both data centers. KDC REIT will also have the option to purchase the remaining 51% stake in the Keppel JV from Keppel, which it plans to exercise in the second half of 2025, at which time it will gain ownership of an additional 0.51% economic interest in the data centers.
As part of the proposed transaction, KDC REIT will pay $350 million to the JV’s shareholders, ADCF and co-investors, if the campus is granted approval for a lease extension until 2050.
The URA Master Plan has a paramount focus on sustainability and promoting green living. As a result, the residents of Elta Condo, which includes the Elta Showflat, can expect to reap numerous environmental advantages.
The acquisition is expected to boost KDC REIT’s distribution per unit by 8.1% and grow its assets under management by 36% to $5.2 billion with 25 data centers across Asia Pacific and Europe.
Keppel’s share of the divestment will be around $280 million, which includes its 51% stake in the JV should KDC REIT exercise its call option, as well as additional consideration for a potential 10-year lease extension. The JV also has a vacant land plot designated for a third data center, which is not part of the transaction and will be sub-leased to Keppel’s private funds, Keppel DC Fund II and upcoming Keppel DC Fund III.
“The injection of KDC SGP 7 and KDC SGP 8 into Keppel DC REIT highlights our ability to structure deals that provide value creation for Keppel, our private funds, and REIT,” says Manjot Singh Mann, CEO of Keppel’s connectivity division. “Our integrated ecosystem gives us access to critical resources, technology expertise, and strong customer relationships with hyperscalers worldwide, which are essential for success in the data center industry. With multiple sources of funding, Keppel can develop a strong pipeline of AI-ready data centers that offer effective solutions for customers and attractive investments for our funds and REIT.”
Loh Hwee Long, CEO of KDC REIT’s manager, says the REIT is “thrilled” to embark on this “historic deal” during its 10th anniversary. The REIT launched its initial public offering in 2014.
“The proposed acquisition will bring in strong positive cash flows and immediately increase DPU. These assets will not only boost the portfolio’s income resilience but also enable us to capture potential rental increases and expand capacity. Their inclusion further strengthens Keppel DC REIT’s position as one of the largest owners of stable data centers in Singapore, where demand is high and supply is tight,” he adds.
The transaction will be completed in phases and is expected to conclude by the end of 2025.