SINGAPORE — Keppel DC REIT has increased the size of its latest private placement to S$625 million, up from about S$600 million, after the fundraising drew strong demand from institutional and accredited investors globally.
The placement was approximately 3.4 times covered, with the majority of the new units allocated to long-only investors and real-estate specialists, according to the REIT manager.
The capital raising comes just days after Keppel DC REIT announced plans to expand its footprint in Japan through the acquisition of two large data centres in Greater Tokyo.
S$625 million raised for Japan data-centre expansion
Keppel DC REIT will issue approximately 297.62 million new units at S$2.10 each, compared with the initial plan for about 280.1 million units.
The S$2.10 issue price represents a roughly 4.4% discount to the REIT’s S$2.1974 volume-weighted average price on Aug. 31. The new units are expected to begin trading on the Singapore Exchange on Sept. 10, subject to listing approval.
About S$615.8 million, or 98.5% of the proceeds, is earmarked to partially finance the acquisition of two Tokyo data centres.
The remaining S$9.2 million will cover fees and expenses related to the placement. If the acquisition does not proceed, the REIT said the funds could instead be used for purposes including debt repayment, future acquisitions, capital expenditure and working capital.
The bigger bet: two Tokyo data centres
The fundraising is closely tied to Keppel DC REIT’s planned acquisition of Tokyo Data Centre 4 and Tokyo Data Centre 5 in Inzai City, one of Greater Tokyo’s established data-centre clusters.
Keppel DC REIT and Keppel have agreed to collectively acquire a 90% effective interest in the two freehold hyperscale co-location facilities for about ¥190 billion, or approximately S$1.55 billion based on the company’s stated exchange rate.
Following completion, expected in the fourth quarter of 2026, Keppel DC REIT will hold an 88.62% effective interest in each facility, while Keppel will hold 1.38%. The existing operator will retain a 10% stake.
The two facilities are fully occupied by four investment-grade clients, according to Keppel DC REIT.
The company says the properties also come with contracted average annual rental escalations of about 2.8%, while existing rents are estimated to be at least 30% below prevailing market rents, potentially providing additional rental-reversion opportunities.
Japan could become a much bigger part of the REIT
The acquisition represents a significant geographical shift for the data-centre REIT.
Japan currently contributes about 9% of Keppel DC REIT’s portfolio rental income, but that figure is expected to rise to approximately 23% after the Tokyo acquisitions.
Singapore will remain the largest contributor, accounting for roughly 60% of portfolio rental income following the deal.
Keppel DC REIT’s total assets under management are expected to increase from about S$6.3 billion to S$7.6 billion, with the portfolio expanding to 27 data centres across 10 countries.
That expansion comes as demand for data-centre capacity continues to be driven by cloud computing, artificial intelligence and the broader digital economy.
Investors appear willing to back the strategy
The strong placement demand is particularly notable because the REIT is raising equity at a discount to its recent market price.
The manager said demand came from both new and existing unitholders globally, including institutional and accredited investors. The high level of coverage suggests significant investor interest in the REIT’s strategy and its exposure to data-centre infrastructure, although strong demand for a placement should not be interpreted as a guarantee of future returns.
The REIT was also coming into the fundraising with stronger first-half operating numbers.
For the first half of 2026, Keppel DC REIT reported:
- Distributable income: S$150.7 million, up 18.5% year on year
- Distribution per unit: 5.714 Singapore cents, up 11.3%
- Gross revenue: S$242 million, up 14.5%
- Portfolio rental reversion: approximately 10%
- Aggregate leverage: 34%
- Contracted revenue-generating power capacity: approximately 95%
These figures help explain why investors may be paying close attention to the REIT’s expansion strategy.
But the expansion also brings new risks
The Tokyo acquisitions could strengthen diversification, but they also increase Keppel DC REIT’s exposure to Japan, foreign-exchange movements, interest rates, data-centre demand and capital requirements.
The fundraising also increases the number of units outstanding, meaning investors need to look beyond headline earnings growth and examine whether acquisitions generate sufficient incremental income on a per-unit basis.
Keppel DC REIT says the Tokyo acquisition is expected to be immediately accretive to distribution per unit. On a pro forma basis, assuming the acquisition had been completed on Jan. 1, 2025, FY2025 DPU would have increased by 2.6%, from 10.381 cents to 10.649 cents.
That is a company-provided pro forma calculation, however, rather than a guarantee of future distributions.
Why data centres are attracting so much capital
The latest deal highlights a much larger investment trend across Asia: data centres are increasingly being treated as strategic infrastructure rather than simply another property category.
AI applications, cloud services, streaming, enterprise software and digital payments all require increasing computing and storage capacity.
Japan is particularly attractive because of its large economy, established technology sector and growing demand for digital infrastructure. Keppel DC REIT’s latest move would deepen its presence in the country while giving the portfolio additional exposure outside Singapore.
The REIT’s strategy is therefore becoming increasingly tied to a fundamental question for global investors:
How much data-centre infrastructure will the AI economy need — and who will own it?
For Keppel DC REIT, investors have now provided a clear answer to one part of that question: they were willing to put significantly more capital behind its Japan expansion than the initial S$600 million target.
The bigger test will be whether the Tokyo assets can deliver the income growth and diversification that the REIT expects once the acquisition is completed.
WWC ONE MEDIA J.M.D
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