Keppel DC REIT Management Screwed Existing Unit-Holders again With Private Placement.

Hi Folks, welcome back to Investment Income for Life. While the media and many folks are heaping praises at Keppel DC REIT ("KDC") latest announcement on 2 new acquisition of modern hyperscale type data centres in Tokyo on September 1, 2026 for S$1.5 billion, I was extremely disappointed that the senior management of KDC has once again chosen the private placement route instead of conducting a rights issue to raise funds among existing unit-holders. This leads to instant dilution of existing unit-holders. There is also the issue of a lack of basic respect for loyal unit-holders. 

1. Quick Recap
On 1 September 2026, Keppel DC REIT announced that it will acquire an 88.62% effective interest in two freehold hyperscale data centres in Inzai, Greater Tokyo. Keppel itself will hold another 1.38%, with the existing operator retaining 10%. The total transaction value is about ¥190 billion (~US$1.2 billion / S$1.5 billion).

The interesting part is that the assets are:

• Fully occupied

• Leased to four investment-grade customers

• Three of those customers are new to Keppel DC REIT

• Expected to be immediately DPU-accretive

• Expected to increase Japan's contribution to portfolio rental income from about 9% → 23%

• Singapore will still account for roughly 60% of rental income.

Keppel says that, on a pro-forma FY2025 basis, the acquisition would have increased DPU from 10.381¢ to 10.649¢, or approximately +2.6%.
 
2. Substantial Equity Fund Raising
To help fund the acquisition, Keppel DC REIT launched a private placement initially targeting at least S$600 million.

Eventually, the placement was subsequently upsized to S$625 million because of strong demand. The new units were priced around S$2.096–S$2.142, so existing unitholders face some dilution, although the acquisition is expected to more than compensate through DPU accretion of 2.6%.

Parting Thoughts
The final issuance price for the private placement is priced at S$2.10 per unit. Based on the market trading price of S$2.23 as of noon of September 7, 2026, this represented a discount of +5.8% to market price which is equivalent to more than one year of dividends given out by KDC for its unit-holders. This is certainly very unfair treatment on existing unit-holders by the senior management of KDC. 

The only consolation is that as per the usual practice before any additional equity placement, an estimated dividend of S$0.02261 per unit from July 1, 2026 to September 9, 2026 was declared for early payment. Ex-date of dividends is on September 9, 2026 and payment date on November 23, 2026.

Ok folks, that's all from me today....bye for now. Time for me to drink more cooling herbal tea.....