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​Singapore-based Keppel DC REIT expands data center footprint

15 Aug 16

Singapore-based Keppel DC REIT has landed in Europe, announcing the acquisition of a data center building in Milan, Italy.

The purchase consideration of the data center is approximately S$57.3 million.

The data center comprises three interconnected four-storey buildings, located approximately eight kilometres away from the Milan city center.

The data center has been fully leased to a large telecommunications company, on a double-net lease structure for 12 years since January 2016. The client will continue to manage the facility, own the fit-out, as well as bear operating expenses and capital expenditure of the mechanical and electrical equipment.

"Milan is home to the Milan Internet Exchange point and is a strategic location as an emerging regional IT hub that is well connected to other European markets,” Chua Hsien Yang, CEO of Keppel DC REIT Management, says.

"This acquisition complements the REIT's existing portfolio profile and growth plans by increasing the proportion of European assets and master-leased facilities,” he says.

“The addition of the shell and core asset on a double-net basis will require minimal capital expenditure, and also adds a well-established client to the REIT's client base," Yang says.

According to BroadGroup, the Italian market presents opportunities with data center demand growth forecasted to outpace supply growth. Utilisation rate is expected to rise steadily, with data center demand projected to grow at a compounded annual growth rate of 15% from 2016 to 2020.

In addition, increasing IT outsourcing, cloud adoption and data sovereignty regulations in Europe are expected to continue driving the region's data center requirements.

The acquisition will be fully funded by debt and is expected to be completed in the third quarter of 2016.

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