Keppel DC Reit to pay up to S$56.6m for data centre's additional core M&E costs

KEPPEL DC Reit will pay up to S$56.6 million to fund installation costs of additional core mechanical and electrical systems (M&E) for levels two and three of its DC1 data centre located at 18 Riverside Road.

This was after it entered into a supplemental deed with master lessee 1-Net Singapore through subsidiary Datacentre One, Keppel DC Reit's manager said on Tuesday in a regulatory update.

As part of the agreement, 1-Net Singapore will pay for any costs exceeding S$56.6 million. It will also pay additional rent ranging from S$6.9 million to S$7.4 million per annum for a period of 10 years.

The additional rent will be calculated based on a certain percentage of the actual costs paid by Keppel DC Reit for the additional core M&E.

Keppel DC Reit added that 1-Net Singapore will supervise and manage the completion of the additional core M&E.

Under the existing master lease agreement with 1-Net Singapore, Datacentre One is required to pay for costs of the construction, installation and completion of additional core M&E to support the expansion of 1-Net Singapore's business and operations at the data centre.

The Reit manager said the entry into the supplemental deed would allow for the data centre to be further optimised. Hence, the deed is beneficial to Keppel DC Reit unitholders as they would benefit from the additional stream of income via the additional rent for a period of 10 years.

Keppel DC Reit units ended flat at S$2.03 on Tuesday before the announcement.