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Data center in Japan acquired by Singapore’s Keppel DC REIT for $149 M

Keppel DC REIT Management Pte Ltd, a Singapore-listed investment trust focused on data center real estate, has expanded into Japan by purchasing a hyperscaler data center in Tokyo for S$201 million ($149 million).

In a statement, Keppel DC REIT Management said that it has reached a deal with Keppel Ltd., the manager of Keppel DC REIT, to purchase a whole 100% stake in a Tokyo, Japan-based shell and core data center.

The entire purchase price is less than 2.5 percent of the JPY 24 billion ($153 million) valuation of the property.

Keppel DC REIT is set to hold a 98.47 percent effective interest in the property, with Keppel holding the remaining 1.53 percent effective interest.

Tokyo Data Center 1, a multi-story freehold property with 190,166 square feet of net lettable area, completed in 2019.

It is master leased to a Fortune Global 500 company and a hyperscaler on a triple-net basis.

Due to Japan’s limited supply of data centers and the rising demand for generative artificial intelligence (AI), there is a chance for positive rental reversion and potential for additional organic growth during the remaining seven years of the lease.

“Our first acquisition in Japan, one of the largest and fastest growing data center markets in Asia, demonstrates our ability to acquire quality assets in key data center hubs,

“Japan is a core market and the addition of Tokyo Data Centre 1 will further strengthen our portfolio’s geographical, as well as income diversification,” said Loh Hwee Long, Chief Executive Officer of Keppel DC REIT.

With this acquisition, Keppel DC REIT expands into Japan for the first time. Japan is the second-largest data center hub in Asia, and it is expected to grow at a compound annual growth rate of more than 10% between 2024 and 2028.

It is mentioned that the rise in generative AI, cloud service growth, digital transformation, and technological advancements like the Internet of Things are expected to drive up demand for data centers in Tokyo and Japan.

Tokyo is home to an estimated 1,000 megawatts (MW) or more of operational information technology (IT), accounting for more than 80 percent of Japan’s total operational capacity.

Tokyo Data Center 1 is part of a main data center hub and is positioned strategically in West Tokyo.

The weighted average lease expiry (WALE) by lettable area will rise from 6.5 years to 6.6 years with the addition of Tokyo Data Center 1, improving Keppel DC REIT’s portfolio occupancy from 98.1 percent to 98.2 percent.

 

 

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