Keppel DC Reit divests German data centre for 50 million euros

KEPPEL DC Reit is divesting Kelsterbach Data Centre in Frankfurt, Germany, for 50 million euros (S$70.6 million).

On Monday (Feb 17), the real estate investment trust’s (Reit) manager said KDCR Netherlands 3, a wholly owned subsidiary of the Reit, entered into a sale and purchase agreement last week with an unrelated third party.

Based on the latest valuation by Savills as at Dec 31, the assessed market value of the data centre was 39 million euros. The sale consideration of 50 million euros is thus 28.2 per cent above the assessed market value.

The divestment, which will be carried out wholly in cash, is expected to take place in the first half of 2025. It is in line with the Reit manager’s “strategic focus on the hyperscale data centre market, which offers strong growth potential”.

It is not expected to have any material impact on Keppel DC Reit’s net asset value and distribution per unit for the financial year ending Dec 31, 2025.

Following the divestment, the Reit’s portfolio occupancy will stand at 96.6 per cent, while its weighted average lease expiry by net lettable area will improve from 6.3 years to 7.4 years.

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Loh Hwee Long, chief executive of Keppel DC Reit Management, said: “Our proactive portfolio management strategy enables us to unlock value and redeploy capital into higher-yielding data centre assets, that will further optimise returns to our unitholders.”

He added: “Post transaction, Keppel DC Reit remains well-positioned to pursue accretive data centre investment growth opportunities in key digital hubs in Asia-Pacific, Europe and the US.”

Net proceeds from the sale will go towards debt repayment and transaction costs. After accounting for those expenses, the Reit’s aggregate leverage will improve by about 0.3 percentage point to 31.2 per cent on a pro forma basis.

Constructed in 1989, the Kelsterbach Data Centre comprises a five-storey shell and core data centre, as well as a six-storey office block.

Units of Keppel DC Reit ended Friday 2.8 per cent or S$0.06 lower at S$2.10.