Singapore infrastructure company Keppel Telecommunications & Transportation (Keppel T&T) has launched the IPO of a real estate investment trust for its data centres, pricing it at the top end of the range at SGD0.93 per unit.
According to the company, Keppel DC REIT offers investors a distribution yield of 6.8% in 2015 and 7.1% in 2016. It also promises distribution growth of 4.5% based on prevailing built-in rent escalation agreements as well as the renewal or commencement of leases and co-location arrangements.
Keppel T&T together with Keppel Land Limited, will, in aggregate, hold approximately 35% in Keppel DC REIT post-listing. Keppel DC REIT has also secured SGD270.0 million worth of commitment from nine cornerstone investors including DBS Bank acting on behalf of certain private banking clients.
The indications of interest received in the placement tranche were valued at SGD4.7 billion, representing approximately 24.4 times of the Placement Tranche.
Keppel DC REIT’s initial portfolio, of approximately 509,913 sq ft and an appraised value of approximately SGD1.0 billion, will comprise of eight data centres located across Asia-Pacific and Europe. They are namely S25 and T25 in Singapore, Gore Hill Data Centre in Sydney, Australia, iseek Data Centre in Brisbane, Australia, Basis Bay Data Centre in Cyberjaya, Malaysia, GV7 Data Centre in London, the United Kingdom, Almere Data Centre in Amsterdam, the Netherlands, and Citadel 100 Data Centre in Dublin, Ireland.
The IPO portfolio has an occupancy rate of 93.5% and a customer retention rate of 97.8% from a customer base that includes Fortune 500 and S&P 100 companies, government-related entities, MNCs and financial institutions.
Keppel DC REIT lease profile comprises of co-location arrangements as well as double-net and triple-net leases. The existing leases and co-location arrangements have built-in rental escalations averaging 2% to 4% per annum and have a weighted average lease expiry (WALE) of 7.8 years.
The REIT will start with an aggregate leverage of 27.8%.
The IPO opened at 9.00pm on Friday, 5 December 2014 and will close at 12.00pm on Wednesday, 10 December 2014. Units in Keppel DC REIT are expected to commence trading on the Singapore Exchange at 2.00pm on Friday, 12 December 2014.