KEPPEL DC Reit will buy the land and the shell and core building of Intellicentre 2 (IC2) in Sydney, Australia, from Macquarie Telecom Pty Limited for A$43.28 million (S$45.88 million).
IC2 is a tier III carrier-neutral data centre completed in 2012. It has a total lettable area of 8,169 sq m and sits on about 20,000 sq m of freehold land within the Macquarie Business Park, a research and business park in Sydney that specialises in the communications and information technology (IT) sectors.
Colliers International has valued the property at A$47.3 million in its report dated Feb 12, 2015.
Upon completion of the transaction, Macquarie Telecom will enter into a lease agreement for the property for an initial term of 20 years, with an option to renew for two further terms of five years each.
On the acquisition, CEO of Keppel DC Reit Chua Hsien Yang 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 & Sullivan, Australia's data centre services market is expected to grow at a compounded annual growth rate of 13.9 per cent from 2013 to 2020.
The first tranche payment of A$40.28 million will be payable in cash, while the rest will be payable on the first anniversary of the completion of the deal, which is expected to be within the third financial quarter ending September 30, 2015.
The facility is expected to be accretive to the Reit's distribution per unit and net asset value per unit. With the acquisition, the overall portfolio weighted average lease expiry will increase to 9.2 years and portfolio risk will be lowered through tenant diversification.