Keppel DC REIT’s DPU in the first quarter of 2018 increased to 1.80 cents from the same quarter last year, on the back of increased gross revenue and net property income.
Following the acquisition of maincubes data centre in Germany, portfolio AUM stands at S$1.66 billion.
Portfolio occupancy however was lower at 93.7% compared to 95.1% the same period last year. This was due mainly to a decline in occupancy in Keppel DC Singapore 1 and Basis Bay Data Centre.
Aggregate leverage has risen significantly to 37.4% compared to 27.9% in the same period last year. In this regard, the REIT is likely to have to be more prudent in managing their interest rate risk. Future acquisitions may also require more funding by equity rather than debt, which may dilute current unitholders.
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Given the strong run up in share price compared to a year ago, distribution yield stands at 5% compared to 6% the same period last year.
At 5%, the distribution yield is on the tighter end compared to the average of all REITs listed on the SGX.
According to the REIT manager, the completion of their first German acquisition in Offernbach am Main is likely to strengthen the REIT’s income stream due to the asset’s 15-year triple-net lease structure.
A triple net lease structure means the client pays rent and all outgoings, and is responsible for facilities management. This arrangement is beneficial to Keppel DC REIT as they are not responsible for outgoings and facilities management.
The REIT continues to be invested heavily in Singapore, with 41% of their AUM located in the country.
This is followed by Australia and Germany at 17.6% and 8.5% of AUM proportion respectively.
The WALE of Keppel DC REIT remains high at 9.6 years, with 74% of the space expiring after 2023. This gives the REIT great certainty in their income stream over the short and medium term.
Keppel DC REIT’s cost of debt has fallen slightly to 2.1% compared to 2.2% in the same period last year. 80% of the borrowings are on a fixed rate basis, which allows the REIT to more accurately determine their interest expenses.
The fixed rates also shield the REIT from any increase in interest rates should they occur in future.
According to Keppel DC REIT’s manager, demand for data centre space continues to be strong as enterprises move towards digitalization and data centre outsourcing.
The increasing trend of cloud adoption is expected to fuel data storage requirements in key data centre hubs.
The manager will capitalize on growth opportunities in the data centre industry to expand and strength Keppel DC REIT’s portfolio of quality assets.
REIT results and announcements can be found at their official website.