🚨Keppel DC REIT is acquiring a ¥82.1 billion (~$555M) hyperscale data center in Inzai City, Greater Tokyo, funded through a S$404M equity raise and JPY-denominated debt. The newly built facility is fully leased for 15 years to a major cloud tenant (reportedly Microsoft), producing an initial ~4% yield and implying ~$11,000/kW valuation. The acquisition lifts Keppel DC’s AUM to S$5.7B, showing that capital continues to chase infrastructure-like income from data centers despite global CRE headwinds.
Acquisition price: ¥82.1 billion (~$555M) for 98.5% interest.
Net income yield: ~4% cap rate on NOI.
Equity raised: S$404.5M rights issue (S$229.8M earmarked for deal)
Portfolio AUM: ~S$5.7B across 25 assets, 83% in Asia-Pacific
Loan Performance. JPY-denominated debt keeps financing costs near 0–1%. Pro forma LTV mid-30s% signals resilient DSCR and prudent leverage.
Demand Dynamics. Hyperscaler pre-lease guarantees near-100% occupancy and indexed rent growth. Tenant credit quality eliminates vacancy risk.
Asset Strategies. Data centers underwritten like infrastructure: low volatility, secure NOI, limited upside beyond escalations. Capex phased for expansion.
Capital Markets. Strong REIT equity uptake shows capital markets backing. Pricing at 1.1% discount to appraisal highlights fierce investor demand for core digital assets.
Core data centers command ~4% cap rates in APAC.
Hyperscaler leases drive pricing power and liquidity.
Balanced equity/debt strategy keeps leverage conservative.
Data centers attract cross-border capital even as offices languish.
🛠 Operator’s Lens
Refi. JPY debt hedges exposure; long WALE reduces covenant risk.
Value-Add. Upside limited; focus on escalations and low downtime.
Development. Modular expansion tied to tenant demand reduces lease-up risk.
Lender POV. Credit tenants + triple-net leases = infrastructure-style underwriting.
Expect more APAC REIT and institutional buys in Tokyo, Sydney, Singapore.
Vacancy near zero ensures rent growth and yield stability.
Key risk: power supply constraints in top hubs; overbuild risk minimal near term.
showing the share of B/C office properties with ≥10% cap rates declining from 74% in H2 2024 to 71% in H1 2025.
