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Tokyo, September 2, 2026 – Keppel DC REIT has made its largest single investment in Japan, acquiring two hyperscale data centres in Greater Tokyo for 190 billion yen (about S$1.5 billion).
The move underscores the trust’s ambition to deepen its footprint in Asia’s fast expanding digital infrastructure market, while delivering immediate gains for investors.
The assets, Tokyo Data Centre 4 and 5, are located in Inzai City, a hub often referred to as “Tokyo’s Data Centre Alley” thanks to its robust power grid and proximity to the capital.
Keppel DC REIT will hold an effective 88.62 percent interest, with Keppel Japan taking 1.38 percent and the existing operator retaining 10 percent.
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Completion is expected in the fourth quarter of 2026.
Financially, the acquisition is compelling. The purchase price represents a 2.1 percent discount to the properties’ valuation of 194 billion yen.
On a pro forma basis, the deal is projected to raise FY2025 distribution per unit (DPU) by 2.6 percent, from 10.381 cents to 10.649 cents.
Funding will be secured through a mix of equity and yen denominated debt, including a S$600 million private placement of 280.1 million new units at a discount of 2.5 tolong 4.6 percent to the August 31 volume weighted average price.
Investors will also receive an advanced distribution of between 2.241 and 2.281 cents for income earned between July 10 and September 9.
Strategically, the acquisition reshapes Keppel DC REIT’s portfolio.
Japan’s contribution to rental income will rise from 9 percent to 23 percent, while Singapore remains the anchor at roughly 60 percent.
The deal also diversifies the tenant base, adding four investment grade clients, three of which are new to the trust.
Lease terms are robust, with weighted average lease expiries of 4.5 years for Data Centre 4 and 10.6 years for Data Centre 5, alongside annual rent escalators of about 2.8 percent.
Current rents are estimated to be 30 percent below market, offering significant reversion potential.
The timing is notable. Japan’s data centre market is experiencing surging demand from cloud providers, AI developers, and enterprise IT firms, driven by the rollout of 5G and rapid digital transformation.
By securing prime assets in Inzai City, Keppel DC REIT positions itself at the heart of this growth story.
Assets under management will expand from S$6.3 billion to S$7.6 billion, spanning 27 data centres across 10 countries.
Risks remain, Yen denominated debt introduces foreign exchange exposure, and tenant concentration, though reduced, still sees the top client contributing 38.2 percent of rental income.
Execution risk around integration and timely completion also looms.
Yet the scale and strategic fit of the acquisition suggest Keppel DC REIT is betting confidently on Japan’s digital future.
