Singapore’s Keppel DC REIT has taken a major step towards Asia-Pacific data center dominance by acquiring its first property in Japan, the strategically located Tokyo Data Centre 1. This $201 million deal marks the company’s entry into the second-largest data center market in Asia, a sector projected for explosive growth over the next five years.
Analysts see the acquisition as a strategic win for Keppel DC REIT. The freehold property boasts a long-term lease with a major hyperscaler client and offers significant potential for future growth. Tokyo Data Centre 1 is built to meet the latest seismic standards and sits within a primary data center hub in West Tokyo.
According to Mr. Loh Hwee Long, CEO of Keppel DC REIT, this acquisition demonstrates our ability to secure top-tier assets in key data center markets.” Japan is a critical market for us, and this addition strengthens our portfolio’s geographic and income diversification.”
The deal is expected to be finalized in Q3 2024, bringing Keppel DC REIT’s total data centers to 23 across 10 countries. The company’s assets under management will increase to $3.8 billion.
The acquisition of Tokyo Data Centre 1 brings several key benefits to Keppel DC REIT. First, it grants them entry into the rapidly growing Japanese data center market, projected for over 10% annual growth through 2028. This positions them to capitalize on the surging demand for data center space driven by factors like artificial intelligence, cloud services, and digital transformation. Second, the property itself offers a stable source of income through its long-term, triple-net lease with a reputable client.
Additionally, this acquisition geographically diversifies Keppel DC REIT’s portfolio, reducing their dependence on any single market. Finally, financing the acquisition with Yen-denominated debt is expected to lower overall financing costs due to potentially lower interest rates on Yen-denominated loans.
