Keppel : DC REIT makes maiden acquisition five months post-IPO

Keppel DC REIT Management Pte. Ltd., as Manager of Keppel DC REIT, is pleased to announce that it has entered into a sale and purchase agreement with Macquarie Telecom to acquire the shell and core building of Intellicentre 2 (IC2) in Sydney, Australia for a purchase consideration of approximately A$43.3 million. This marks Keppel DC REIT's maiden acquisition five months after its listing.

IC2 is a Tier III carrier-neutral data centre strategically located within the Macquarie Business Park, a research and business park in Sydney that specialises in the communications and information technology (IT) sectors. Completed in 2012, this data centre has a total lettable area of 8,169 sm and sits on approximately 20,000 sm of freehold land.

Macquarie Telecom (MT), which is listed on the Australian Stock Exchange, was named the Best Australian Data Centre Service Provider by Frost & Sullivan in 2013. MT will sign a 20-year triple-net lease agreement with Keppel DC REIT, which includes a mechanism for annual rental escalation and options to extend the lease. MT will also manage the facility and be responsible for all property-related outgoings.

The purchase consideration of approximately A$43.3 million compares favourably with the independent market valuation carried out by Colliers International. The facility is expected to be accretive to the REIT's Distribution Per Unit and Net Asset Value Per Unit. With this acquisition, the overall portfolio Weighted Average Lease Expiry (WALE) will increase to 9.2 years and portfolio risk will be lowered through tenant diversification.

Mr Chua Hsien Yang, CEO of Keppel DC REIT said, "Sydney is a prominent data centre hub given its strong data centre ecosystem with established telecommunication infrastructure, skilled IT resources, geological and political stability, as well as a high concentration of multinational corporations.

"This acquisition builds on Keppel DC REIT's established track record in Sydney and expands its footprint in Australia. Keppel DC REIT will be well-positioned to tap the market's growth potential," he added.

According to Frost & Sullivan1, Australia's data centre services market is expected to grow at a compounded annual growth rate of 13.9% from 2013 to 2020. Their latest survey revealed that over three-quarters of organisations that utilise a data centre are using an outsourced provider.

The acquisition will initially be fully funded by debt and is expected to be completed in the third quarter of 2015. Upon completion, Keppel DC REIT's aggregate leverage is expected to increase from 26.7% to approximately 29.9%. The inclusion of IC2 will bring Keppel DC REIT's portfolio to comprise nine quality data centres strategically located in key data centre hubs across Asia Pacific and Europe, with an assets under management value of approximately S$1.07 billion.

1Frost & Sullivan, Australian Data Centre Services Market Report 2014

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About Keppel DC REIT (www.keppeldcreit.com)

Listed on 12 December 2014, Keppel DC REIT is the first data centre REIT listed in Asia and on the Singapore Exchange (SGX-ST).

Keppel DC REIT's investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets, with an initial focus on Asia Pacific and Europe.

Its current portfolio comprises eight high-quality data centre properties with aggregate lettable area of approximately 509,913 sq ft, strategically located in key data centre hubs across seven cities in Asia Pacific and Europe.

Keppel DC REIT's data centre properties in Asia Pacific include S25 and T25 in Singapore; Basis Bay Data Centre in Cyberjaya, Malaysia; Gore Hill Data Centre in Sydney, Australia; and iseek Data Centre in Brisbane, Australia. In Europe, Keppel DC REIT owns GV7 Data Centre in London, United Kingdom; Citadel 100 Data Centre in Dublin, Ireland; as well as Almere Data Centre in Amsterdam, Netherlands.

Keppel Telecommunications & Transportation (Keppel T&T), the Sponsor of the REIT, has also granted Rights of First Refusal (ROFR) for future acquisition opportunities of its income-producing data centre assets.

The REIT is managed by Keppel DC REIT Management Pte. Ltd., a wholly-owned subsidiary of Keppel T&T, with the key objectives of providing Unitholders of Keppel DC REIT with regular and stable distributions, and achieving long-term growth while maintaining an appropriate capital structure.

Important Notice

This Announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Units.

This Announcement may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale or distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses (including employee wages, benefits and training costs), governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager's view of future events. The past performance of Keppel DC REIT and the Manager are not necessarily indicative of the future performance of any of them.

The value of Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested.

Investors have no right to request the Manager to redeem their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited ("SGX-ST"). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.