Keppel DC REIT buys two AI datacentres: REITs Weekly Watch

What happened?

An index of Singapore REITs fell further in the past week. The CSOP iEdge S-REIT Leaders Index ETF closed lower for the week at S$0.733, declining 1.2% from its close in the previous week of $0.742.. 

This would bring the ETF just within 5% of its 52-week low of S$0.70, before the US Federal Reseve started on its interest rate cuts. 

Losses were led by REITs with assets in emerging markets, including Lippo Malls Indonesia Retail Trust, as the US Dollar strengthened against emerging market currencies. On the other hand, REITs with US office assets led gains following weeks of declines. 

To find out what is driving weakness in Singapore REITs, join us for our upcoming free webinar on 26 November, where we will discuss what to look out for the sector in 2025. Register for free here.

Singapore REITs Top Performers

• Manulife US REIT
• Prime US REIT
• Keppel Pacific Oak US REIT
• Sasseur REIT
• Elite UK REIT

Singapore REITs Worst Performers

• Lippo Malls Indonesia Retail Trust
• Frasers Logistics & Commercial Trust
• Acrophyte Hospitality Trust
• CapitaLand Integrated Commercial Trust
• Keppel REIT

Check out our Singapore REIT screener to discover the best REIT for your portfolio.

Singapore REITs in the news this week

Keppel DC REIT to acquire two data centres worth S$1.38 billion

Keppel DC REIT is acquiring two hyperscale data centres, Keppel DC Singapore 7 and 8, for S$1.38 billion, marking one of Southeast Asia’s largest data centre deals. 

These data centres are fully leased to major technology companies and designed to support AI-related workloads. With this acquisition, 

Keppel DC REIT’s total portfolio will grow to 25 data centres, increasing its total asset value by 36% to S$5.2 billion. 

The transaction is expected to increase income available for distribution to investors by 8.1%, making it immediately beneficial to unitholders.

This acquisition strengthens Keppel DC REIT’s position in Singapore, a key hub for data centres, while diversifying its income sources through long-term leases with established tenants. 

Additionally, the REIT gains potential for future rental growth and capacity expansion. 

This deal aligns with Keppel DC REIT’s strategy of building a resilient portfolio of high-quality, income-generating assets to deliver sustainable returns.

Keppel DC REIT's private placement at $2.09 per unit was 3.4 times subscribed, and raised gross proceeds of about S$700 million. 

Read Beansprout's analysis of Keppel DC REIT's acquisition and preferential offering here.

Here's what bloggers have been saying about the transaction:

• Keppel DC REIT $2.03 Preferential Offering Explained by Dr. Wealth
• Keppel DC REIT buys $1.1 billion in AI Data Centres – Share Price jumps to 3-year highs? Will I buy this REIT at 4.3% dividend yield? by Financial Horse
• Keppel DC REIT Announces a S$1.4 Billion Acquisition: 5 Things That Income Investors Need to Know by The Smart Investor

Related links:

• Keppel DC REIT share price history and share price target
• Keppel DC REIT dividend history and dividend forecasts

CapitaLand Ascott Trust receives shareholder approval for acquisition of Lyf Funan

CapitaLand Ascott Trust has obtained the approval from stapled securityholders for the acquisition of Lyf Funan, a 329-room co-living property, for S$263 million. The property, opened in 2019, achieved an average occupancy rate of over 80% in the first half of 2024. 

Upon completion, CLAS will enter into a 20-year master lease agreement with The Ascott Limited for lyf Funan Singapore. This acquisition will increase CLAS's Singapore portfolio to five properties, raising the proportion of its assets in Singapore from 16% to 19%.

This acquisition is expected to enhance CLAS's distribution per stapled security by 1.5% on a pro forma basis for FY2023.

The transaction will be funded primarily through proceeds from the earlier divestment of Citadines Mount Sophia Singapore, which was completed in March 2024. 

Read Beansprout's analysis: CapitaLand Ascott Trust - Acquisition of lyf Funan reflects active capital recycling

Related links:

• CapitaLand Ascott Trust share price history and share price target
• CapitaLand Ascott Trust dividend history and dividend forecasts

The Big Important Singapore REIT Story

Navigating opportunities in European S-REITs

European S-REITs—Cromwell European REIT, IREIT Global, and Elite UK REIT—are experiencing stabilised property valuations following recent interest rate cuts by European central banks. The European Central Bank has reduced its benchmark rate to 3.25% after three cuts since June 2024, as inflation eased to 1.7% in September, below the 2% target. We find out how the European S-REITs are positioned for potential further rate cuts here.

Related Reports:

• Elite UK REIT: Room for positive asset repricing
• Cromwell European REIT: Stabilisation of asset values with interest rate cuts
• IREIT Global: Pure-play Western Europe-focused REIT

Here's what bloggers have been saying about European S-REITs:

• Cromwell European REIT's 3Q FY24 Result Review by REIT-TIREMENT
• Cromwell European REIT Strengthens with Stable Portfolio and Strategic Refinancing by ProsperUs
• OCBC And UOB: When To Buy More? IREIT Global: When Is AK Buying More? by AK71SG

Credit to Vince from REIT-Tirement for compiling Singapore REIT blog posts and videos

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