SINGAPORE (May 7): The manager of Keppel DC REIT is acquiring a 99% interest in Kingsland Data Centre for a cash consideration of $141.2 million from seller Kingsland Development and Nylect Holdings.

The consideration is derived from $295.1 million, being 99% of the value of the property, less $153.9 million, being the adjustments for the 99% of the target’s net liabilities.

Kingsland will retain the remaining 1% of the data centre.

The property is located at 13 Sunview Way with about 98,769 net lettable area (NLA) and is a five-storey, purpose-built, carrier-neutral colocation data centre hosting leading internet enterprise and IT services clients.

The facility’s IT power is fully committed and has a committed occupancy of 84.2%, with the vacancy being offices.

The acquisition is expected to be completed in 1H18. After which, the facility will be renamed as Keppel DC Singapore 5 (KDC SGP 5).

In the first year following completion of the acquisition, the vendors will provide rental support if Kingsland's net property income is less than the threshold income amount of $25 million.

A subsidiary of Keppel Data Centres Holding will be appointed as master lessee and facility manager under a Keppel master lease arrangement that is similar to the other Singapore data centres in Keppel DC REIT’s portfolio.

The manager of Keppel DC REIT is also proposing a private placement of 224 million new units at an issue price of $1.353 to raise gross proceeds of $303.1 million to fund this acquisition.

If there is any balance in gross proceeds, the REIT will use it for general corporate purposes and/or working capital purposes.

This issue price represents a discount of 4.9% to the volume weighted average price of $1.422 per unit, as at May 4.

Chua Hsien Yang, CEO of Keppel DC REIT Management says, “The addition of KDC SGP 5 will allow Keppel DC REIT to establish a strategic presence in the western part of Singapore and diversify its offering to clients. KDC SGP 5 will boost the REIT’s footprint in Singapore to nearly 300,000 sf of aggregate lettable area."

Units in Keppel DC REIT last traded 2 cents higher at $1.43 on Friday.