Keppel DC REIT to acquire Greater London data center for around S$106M

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Keppel DC REIT has entered a deal to acquire a data center located in the Greater London area in the U.K. for 57 million British pounds or around S$105.5 million, from a Fiera Real Estate/SEDCO Capital joint venture, the Singapore-listed REIT said in a filing to SGX Monday.

The property is expected to be accretive to distribution per unit (DPU), the REIT said, without providing a pro forma estimate.

The REIT said the deal will be funded with the proceeds of a recent placement and external financing, which will boost its aggregate leverage to 38.2 percent from 36.4 percent at end-September.

The asset, located in Bracknell, is on a 4.7 acre land plot and has three interlinked two-storey buildings with data center space and ancillary office space, the REIT said. The property will be named London Data Centre, the filing said.

London Data Centre is fully leased on an existing triple-net lease to a leading telecommunications company until 2039, Keppel DC REIT said. Under a triple-net lease, the tenant pays property expenses including real estate taxes, insurance, maintenance and utilities.

“We are pleased to strengthen our presence in London, a top global data centre hub, with the acquisition of a data centre with a long leaseback period to a strong tenant,” Anthea Lee, CEO of the REIT’s manager, said in the statement.

The independent valuation, conducted by Newmark Valuation & Advisory, valued the property at 57 million pounds, or around S$105.5 million, the REIT said.

The planned acquisition is Keppel DC REIT’s second in the Greater London area’s growing data center hub, and its third in the U.K., the filing said, adding after the deal is completed, it will have 21 data centers across Asia Pacific and Europe.

The REIT noted the U.K. is the fourth largest data center market globally, after the U.S., China and Japan, according to 2019 data from Structure Research. New data center demand in London is projected to grow at a 14.2 percent compound annual growth rate (CAGR) between 2020 and 2024, the REIT said, citing data from Danseb Consulting.

The acquisition is expected to be completed in the first quarter of 2022, the filing said.