Keppel DC Reit’s Tokyo drift: The easy yen trade is over

[SINGAPORE] ​Keppel DC Real Estate Investment Trust’s (Reit) S$1.4 billion purchase of two Tokyo data centres hits all the right corporate notes: an 88.6 per cent stake in two freehold assets at a 2.1 per cent discount to valuation, immediate accretion to distribution and net asset value, and an upsized S$625 million placement to help pay for it.

​All of which reads well. But the real story is buried in the debt.

According to Maybank analyst Krishna Guha, the yen debt funding this purchase carries an interest rate of about 2.9 per cent. ​That is not a massive number, but it is a painful reminder of what is gone.