Keppel REIT’s second data centre deal reaffirms Frankfurt attraction

The Singapore-listed Keppel DC REIT data centre real estate investment trust has acquired a second asset in Germany in an €81.8m deal, by buying the fully-let 50,248 sqm data centre facility in Kelsterbach, near Frankfurt Airport, from local developer Maena KG.

Keppel DC REIT said the deal, which is expected to be completed next year, is likely to be fully funded by debt. Property advisor JLL had valued the asset at €86.0m, using both income capitalization and discounted cash flow methods, although Singapore’s Business Times put the price paid at €81.8m (S$125.3m).

The centre, a freehold purpose-built shell and core facility, is fully leased on a triple-net basis, under which the tenant agrees to pay all real estate taxes, building insurance, and maintenance fees until the end of 2025.

The latest acquisition is the company’s second data centre in Germany after it bought the Maincubes Data Centre in Offenbach near Frankfurt last year for €84.0m on a forward purchase agreement, and its eighth in Europe. 

Chua Hsien Yang, CEO of Keppel DC REIT Management, said, “The addition of this data centre will strengthen Keppel DC REIT’s foothold in Germany, which is one of the most established data centre markets in Europe. This acquisition underscores our focus on executing and delivering on our growth initiatives to capture value from the fast-growing digital economy and capitalise on rising demand for data centre facilities.”

The attraction of Frankfurt, said Mr. Yang, is the city’s status as an international connectivity hub. Home to the world’s largest internet exchange, DE-CIX, Frankfurt’s data centre demand is supported by its “strong connectivity, favourable business climate, as well as its position as a major financial hub in Germany”, the REIT manager said.

Also persuaded of Frankfurt’s advantages as a data centre location, Singapore’s biggest cross-border investor GIC also got into the Frankfurt data centre market in July of this year when it formed a $1 billion joint venture with California’s Equinix to build and operate hyperscale data centres in Europe. That deal gave the Singaporean sovereign wealth fund a stake in a pair of sites in the Frankfurt area.

Just last month, mainland tech giant Alibaba signed an agreement with Vodafone to establish a co-location data facility in Frankfurt to service its cloud applications. In June of this year, Japan’s NTT Communications Corporation completed the 24,000 sqm initial phase of its Frankfurt 4 Data Centre facility, adding 80 MW of IT load across five data centre buildings in the complex.

Keppel DC REIT now owns 18 data centres across 11 locations in Asia Pacific and Europe, valued at $2.7bn and covering an aggregate leasable area of 180,000 sqm. This latest acquisition comes just three months after the REIT bought a pair of Singapore facilities for a combined S$585.1 million ($431 million).