By Kimberley Kao

Keppel plans to spin off its data center joint venture to Keppel DC REIT for $1.03 billion, in one of Southeast Asia's largest data-center transactions.

The companies said in a joint statement Tuesday that the deal involves divesting two AI-ready hyperscale data centers to Keppel DC REIT for 1.38 billion Singapore dollars, equivalent to US$1.03 billion.

The joint venture between Keppel's Connectivity Division and Cuscaden Peak Investments owns Keppel's data-center campus in Singapore. The campus comprises two AI-ready hyperscale data centers, as well as a vacant land plot earmarked for a third data center, which isn't included in the proposed deal.

After the divestment, Keppel DC REIT will have full ownership of the two data centers, while Keppel will retain operating and facility management roles for both. Keppel's share of the total gross divestment price will be about S$280 million, the companies said. The transaction is expected to be completed by the end of next year.

The vacant land plot will be subleased to Keppel's private funds, which will be used to develop the third data center.

The proposed acquisition will expand Keppel DC REIT's assets under management by 36% to S$5.2 billion, with 25 data centers across Asia Pacific and Europe.

Keppel DC REIT is managed by Keppel DC REIT Management and is sponsored by Keppel.

"These assets will not only enhance our portfolio's income resilience but also allow us to capture potential upside from rental uplifts and capacity expansion," Keppel DC REIT CEO Loh Hwee Long said. The proposed acquisition will deliver strong positive cash flows and be immediately accretive to distribution per unit, Long said.

Separately, Keppel DC REIT said Tuesday that it is launching an equity fundraising through private placement and preferential offering, aiming to raise S$1 billion. The set price range is between S$2.074 to S$2.128 for each new private placement unit, and between S$2.03 to S$2.08 for each preferential offering new unit.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

November 18, 2024 22:08 ET (03:08 GMT)

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