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Keppel DC Reit
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AIMSAMPI Reit
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PiRPiR
Master |
20-Jul-2023 16:13
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Results on Monday 24th Jul | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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PiRPiR
Master |
20-Jul-2023 16:09
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Crept up more than 10% on the list 1 month or so | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Joelton
Supreme |
07-Jun-2023 12:45
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Tenant&rsquo s bankruptcy will not affect operations of S&rsquo pore-listed data centre Reits
SINGAPORE &ndash Keppel DC Reit said on Tuesday that Cyxtera, a Florida-based data centre operator which has filed for bankruptcy in the United States, is a tenant at its GV7 Data Centre in London.
But the Singapore-listed pure-play data centre real estate investment trust (Reit) said the GV7 Data Centre accounts for less than 2 per cent of the Reit&rsquo s assets under management (AUM) and has &ldquo no material impact&rsquo on dividends investors can expect.
Besides GV7, Keppel DC Reit has two other data centres in London.
The Reit also has data centre assets across Europe, in Germany, Ireland, Italy and The Netherlands.
Cyxtera, a data centre operator based in Miami, Florida, filed for bankruptcy in the US on Sunday.
Keppel DC Reit has said that it is capable of managing the data centre in the event that Cyxtera cannot continue doing so, noted Mr Xavier Lee, an equity analyst for Morningstar Investment Adviser Singapore.
This should mitigate downside risk on the Reit&rsquo s earnings, he added.
Keppel DC Reit&rsquo s European assets made up 28.4 per cent of AUM by end-March, with the remainder in the Asia Pacific (Singapore, Australia, China and Malaysia).
On Tuesday, Singapore-listed data centre provider Mapletree Industrial Trust (MIT) announced that its third-largest tenant filed for bankruptcy in the US on Sunday. The Reit manager did not name the tenant but ST understands that this tenant is also Cyxtera.
The tenant currently occupies space in eight data centres in North America and has only partially fulfilled its rental obligations for May, the manager of MIT said.
The Reit&rsquo s manager added that the tenant contributed about 3.2 per cent of monthly gross rental income as at end March.
MIT also said it has a large and well-diversified tenant base of more than 2,300 tenants, with its top 10 tenants accounting for only 29.5 per cent of the portfolio&rsquo s monthly gross rental income.
About 54 per cent of MIT&rsquo s assets under management is in data centres, while the remainder is in flatted factories, business parks and other industrial buildings.
On Monday, the Singapore-listed Digital Core Reit confirmed that Cyxtera was its second-largest tenant but that its bankruptcy will have minimal impact on earnings.
DBS said in a report that the financial health of Cyxtera had weighed heavily on the unit prices of Keppel DC Reit, MIT and Digital Core Reit. Cyxtera&rsquo s financial woes had created an overhang in the unit prices of the three Reits over the past few months, it said.
SGX-listed Digital Core Reit expects minimal impact from US bankruptcy of second-largest customer
DBS analysts Derek Tan and Dale Lai added that the confirmation of Cyxtera&rsquo s bankruptcy should provide some clarity for investors.
Morningstar&rsquo s Mr Lee said the outlook for data centres remains bright, as &ldquo technological trends such as artificial intelligence and cloud computing continue to drive strong demand for data centres&rdquo .
He said the two data centre Reits under his coverage, MIT and Keppel DC Reit, are fairly valued currently. Morningstar&rsquo s fair value estimate for MIT is $2.41, and its fair value estimate for Keppel DC Reit is $1.92.
Maybank Securities analyst Krishna Guha said there are headwinds as some players may have &ldquo exposures to tenants who may have been adversely impacted by higher cost of capital, funding slowdown for the tech/venture industries as well slowdown in sectors such as crypto&rdquo .
Mr Alvin Chow, chief executive of financial education company Dr Wealth, said that while investors cannot know which tenants will go bankrupt or will be in trouble, they can protect themselves by investing in those data centre Reits that have a more diversified tenant base.
&ldquo Basically, more tenants and less concentration reduces bankruptcy risks&rdquo , Mr Chow added.
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CheeryVGoh
Supreme |
05-Jun-2023 18:02
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Cyxtera is a tenant of Keppel DC, MIT and DC Reit. Cyxtera files for U.S. bankruptcy on Sunday. |
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XiaoFeiXia
Senior |
05-Jun-2023 16:24
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As expected...... | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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XiaoFeiXia
Senior |
03-Jun-2023 17:07
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Keppel DC is kick out and replace by Seatrium! So Free fall coming....... | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Joelton
Supreme |
02-Jun-2023 14:36
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Keppel DC Reit manager appoints new CEO outgoing chief moves to FLCAM
A NEW chief executive officer has been appointed at the manager of Keppel DC Real Estate Investment Trust (Reit). : AJBU +0.48%
Loh Hwee Long will be replacing the current CEO Anthea Lee from Jul 28, said the Reit&rsquo s manager via a bourse filing on Thursday (Jun 1).
The 46-year-old Loh is currently overseeing data centre investments as chief investment officer at Keppel Corporation, a position he will relinquish after he takes over as the CEO of the Reit&rsquo s manager. He has been with Keppel Corporation for more than 10 years.
Before he joined Keppel, he oversaw investments in student housing and new market development at real estate company Mapletree Investments, as well as real estate investment at sovereign wealth fund GIC.
Christina Tan, chairman of the manager, said that the board will work closely with the outgoing and incoming CEOs to ensure a smooth transition.
&ldquo The board looks forward to working closely with Hwee Long to continue growing Keppel DC Reit and deliver sustainable value to all stakeholders. We would also like to thank Anthea for her contributions to the manager over the past eight years and wish her success in her future endeavours,&rdquo said Tan.
In a separate bourse filing, Frasers Logistics and Commercial Asset Management (FLCAM), the manager of Frasers Logistics and Commercial Trust : BUOU +3.23%(FLCT), announced that Lee will be taking over its helm as CEO-designate.
She will be replacing its current CEO Robert Stuart Claude Wallace from Aug 14 this year.
In her role as CEO, Lee will oversee management, business direction and day-to-day management of the manager, and will be responsible for the execution of strategies and policies approved by its board.
She will also be working closely with its board and management team to ensure that FLCT&rsquo s business plans are implemented.
The manager had previously announced that Wallace will no longer be the CEO from Aug 1, but his tenure has now been extended by two weeks.
According to the filing, Lee has been in Reit management for the past 16 years under Keppel Group.
Ho Hon Cheong, board chairman of FLCAM, said that Lee is a &ldquo seasoned real estate veteran&rdquo with over 26 years of experience in the industry.
&ldquo With her experience spanning across asset classes and geographies, we are pleased to have Anthea join the FLCAM family to lead the continued growth and direction for our business. The board would also like to express its appreciation to Rob for his contributions, and we wish him the best in the next phase of his career back home in Australia,&rdquo said Ho.
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Michael1688
Member |
29-May-2023 16:11
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SATS & KeppelDCReit both at bottom of STI in term of Market Cap. I wonder will KeppelDCReit get replace by Seatrium. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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pnuklis
Master |
02-May-2023 11:50
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New TP is $2.60 bro | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Joelton
Supreme |
20-Apr-2023 10:26
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DBS cheers Keppel DC REIT with ' buy' call OCBC raises fair value
Analysts from DBS Group Research and OCBC Investment Research have kept their calls on Keppel DC REIT AJBU -0.47% , following its 1QFY2023 business update showing continued improvement.
For the three months ended March 2023, the data centre REIT owner saw its distribution per unit increase by 3% y-o-y thanks to better tax efficiency.
Keppel DC REIT' s operational performance improved too, with revenue up 6.5% y-o-y and net property income up 6.3%.
" It was a steady start for KDCREIT," says DBS in its April 19 note.
Factors contributing to this include increased contribution from the REIT&rsquo s Guangdong Data Center 2 and the building shell of Guangdong Data Centre 3, various other asset enhancement initiatives, as well as organic growth from renewals and income escalations.
On the other hand, the numbers were weighed by lower contributions from Singapore co-location assets due to higher expenses such as power, as well as the effect of the stronger Singdollar versus revenue booked in foreign currencies.
As of 1QFY20223, portfolio occupancy rates remained stable at 98.5%, in line with the preceding 4QFY2022.
In addition, tenant credit remains " solid" with minimal arrears, says DBS, which has kept its &ldquo buy&rdquo call and $2.35 target price. Keppel DC REIT is looking to renew leases equivalent to 14.3% of its income this year and DBS believes the REIT' s portfolio remains resilient with strong retention rates.
" The manager continues to see robust demand in all the markets Keppel DC REIT operates with minimal arrears, implying that tenant credit standing remains strong," says DBS, lauding too, the REIT manager&rsquo s rates and forex management chops, that has &ldquo substantially&rdquo shielded it from rate spikes and forex volatility.
&ldquo Overall, we remain attracted to Keppel DC REIT at 1.4x P/B, and with a forward yield of 5%, places them in a good position to deliver accretive acquisitions,&rdquo says DBS.
In its separate April 19 note, OCBC Investment Research flags that Keppel DC REIT, besides organic growth, is also on the lookout for new acquisitions.
Citing the REIT&rsquo s manager, &ldquo more viable&rdquo acquisition opportunities at this point in time would come from Japan and Europe.
Keppel DC REIT can also tap on its sponsor&rsquo s pipeline, where there is more than $2 billion worth of data centre assets under development and management. However, any deals might only take place towards the end of the year, adds OCBC.
OCBC also points out that Keppel DC REIT has already &ldquo substantially&rdquo hedged its estimated foreign-sourced distributions till end of 2023 and starting in April, has too, progressively hedged its overseas income till the end of June 2024.
While OCBC is keeping its distribution per unit estimates unchanged, it has lowered its risk-free rate assumption from 3.50% to 3.15%. &ldquo Consequently, our fair value estimate increases from $1.98 to $2.05.&rdquo
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Joelton
Supreme |
19-Apr-2023 11:53
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Keppel DC Reit Q1 DPU up 3% on contributions from acquisitions, asset management drive
DATA centre-focused Keppel DC Reit : AJBU 0%&rsquo s distribution per unit (DPU) rose 3 per cent to 2.541 Singapore cents for its first quarter ended Mar 31, 2023, from 2.466 cents the year before.
This was mainly due to an increase in gross revenue from the acquisitions of Guangdong Data Centre 2 and the building shell of Guangdong Data Centre 3 the completion of asset enhancement initiatives (AEIs), renewals and income escalations as well as tax savings, the Reit&rsquo s manager said in a business update on Tuesday (Apr 18).
The gains were partially offset by net lower contributions from some of the Reit&rsquo s colocation assets in Singapore due to higher facilities expenses.
The Reit also saw higher finance costs from the refinanced loans and unhedged loans, and a depreciation of foreign currencies against the Singapore dollar, the manager said.
Gross revenue rose 6.5 per cent to S$70.4 million for the quarter, from S$66.1 million a year earlier.
Net property income grew 6.3 per cent on year to S$63.9 million for the quarter, from S$60.1 million the same period a year ago.
Distributable income rose 4.1 per cent on year to S$46.3 million, from S$44.5 million the year before.
The Reit has portfolio occupancy of 98.5 per cent and a weighted average lease expiry of 8.2 years as at Mar 31, 2023.
Property expenses for the quarter were up 9 per cent to S$6.5 million, largely from assets in Dublin following the completion of AEIs.
Meanwhile, finance income jumped 43.8 per cent to S$3 million, mainly due to coupon income from Guangdong Data Centre 3.
Aggregate leverage was 36.8 per cent as at Mar 31, 2023.
The manager noted that debt is diversified across five currencies, with the bulk of debt expiring from 2026 and beyond. It also expects to complete the refinancing of all its loans due in 2023 by this month.
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spursfan
Supreme |
18-Apr-2023 17:37
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https://links.sgx.com/1.0.0/corporate-announcements/VGDH0ARONL3IMKA4/754855_MREL_KDCREIT%201Q2023%20Presentation%20Slides.pdf | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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dc16888
Master |
23-Mar-2023 09:22
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seems like broke up the past 5 or 6days' s high, wait to see eod price https://www.tradingview.com/x/XvEjadRF/ |
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Joelton
Supreme |
06-Feb-2023 09:20
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S-Reits report 7 per cent gains in January
IN January, S-Reits posted 7.1 per cent in total returns (based on the iEdge S-Reit Index) and booked net institutional fund inflows of S$3.2 million, outpacing STI&rsquo s 3.5 per cent total returns.
The US Federal Reserve at the Feb 1 FOMC meeting anchored to a 25 basis point (bps) hike instead of a 50bps hike, which saw 10-year US Treasury yields decline to around 3.5 per cent.
Expectations of a slower pace of interest rate increases this year could affect market sentiment towards sectors which are more sensitive to interest rates, such as Reits.
Within the STI, all seven S-Reits in the index outperformed the STI&rsquo s 3.5 per cent total returns for January.
The top five performing S-Reits were Keppel DC Reit : AJBU +0.47% (+15.3 per cent), Mapletree Pan Asia Commercial Trust : N2IU +0.55% (+9.0 per cent), Frasers Logistics & Commercial Trust : BUOU +4.62% (+8.6 per cent), Mapletree Logistics Trust : M44U +2.33% (+7.7 per cent), and Mapletree Industrial Trust : ME8U +1.26% (+7.2 per cent).
Keppel DC Reit reported on Jan 31 that its FY22 distributable income grew 7.7 per cent year on year, while maintaining its continued pursuit of data centre growth opportunities with its disciplined capital management approach
In 2022, Keppel DC Reit was among the 18 S-Reits that announced acquisitions, expanding its presence in London, one of the top global data centre hubs and in Guangdong, one of China&rsquo s most established data centre markets.
Mapletree Pan Asia Commercial Trust reported on Jan 31 that its Q3 FY22/23 net property income grew 76.8 per cent year on year, driven by full quarter contribution from properties acquired through the merger and increased contribution from the Singapore portfolio.
Positive rental reversion was recorded in all markets except Greater China.
Frasers Logistics & Commercial Trust in its Q1FY23 business update released on Feb 1 highlighted healthy leasing momentum with 2.8 per cent positive rental reversions.
The Reit also updated that it maintained full occupancy for its logistics and industrial portfolio, while commercial portfolio stood at 89.8 per cent.
Mapletree Logistics Trust reported on Jan 19 that its Q3 FY22/23 amount distributable to unitholders grew 10.8 per cent year on year, and its resilient operational performance was underpinned by a stable occupancy rate of 96.9 per cent and 2.9 per cent positive rental reversions.
Mapletree Industrial Trust reported on 26 Jan that its Q3 FY22/23 net property income rose 4.9 per cent year on year, despite lower distribution to unitholders.
Average overall portfolio occupancy increased to 95.7 per cent, with its Singapore portfolio improving to 96.9 per cent while its North American portfolio remained at 93.1 per cent.
Positive rental reversions were achieved across most of its segments in Singapore.
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Joelton
Supreme |
01-Feb-2023 09:24
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Keppel DC Reit&rsquo s H2 DPU up 4.8% to S$0.05165
DATA centre-focused Keppel Data Centre (DC) Reit on Tuesday (Jan 31) posted a 4.8 per cent increase in distribution per unit (DPU) to S$0.05165 for the second half ended Dec 31, 2022, from S$0.04927 in the corresponding period a year ago.
Gross revenue was up 4.3 per cent to S$141.8 million for the half-year period, from S$135.9 million a year ago. Net property income (NPI) grew 4 per cent on the year to S$129.3 million for the half year, from S$124.3 million. Distributable income rose 7.3 per cent year on year to S$93.7 million, from S$87.4 million.
In a bourse filing, the real estate investment trust&rsquo s (Reit) manager said that the growth in distributable income was mainly due to a number of contributions: from the accretive acquisition of London Data Centre Guangdong Data Centres 1, 2 and 3 the investment in bonds issued by M1 Network the contributions from post asset enhancement initiatives at DC1 and the Dublin assets as well as the completion of Intellicentre 3 East Data Centre.
A distribution of S$0.05165 per unit for the period Jul 1 to Dec 31, 2022 will be paid on Mar 14 after the record date of Feb 8.
For the full year, gross revenue was up 2.3 per cent to S$277.3 million.
NPI was up 1.8 per cent to S$252.5 million, while distributable income was up 7.7 per cent to S$184.9 million.
Meanwhile, full-year DPU rose 3.7 per cent to S$0.10214.
Its manager described Keppel DC Reit&rsquo s portfolio performance as &ldquo resilient&rdquo , and said that this was driven by the addition of &ldquo quality assets and active asset management&rdquo , noting the acquisitions of London Data Centre and Guangdong Data Centres 2 and 3 in 2022.
As at Dec 31, 2022, Keppel DC Reit had approximately S$3.7 billion of assets under management, up from S$3.4 billion as at end-2021.
The Reit&rsquo s portfolio occupancy stood at 98.5 per cent with a long portfolio weighted average lease expiry (WALE) of 8.4 years as at Dec 31, 2022.
This was mainly attributable to newly acquired assets with remaining lease tenures ranging from 15 to 17 years, as well as the manager&rsquo s &ldquo continued proactive asset management efforts&rdquo , its manager said. Keppel DC Reit has also secured an offer to extend the remaining land tenure of Keppel DC Singapore for a further term of nine years.
On top of that, its manager added, it had secured new, renewal or expansion contracts at its data centres in Singapore, Malaysia, Australia and Ireland in 2022, which have helped to defray higher costs. The impact of inflation was also mitigated by &ldquo the positive income reversions and built-in income and rental escalations&rdquo , it said.
Anthea Lee, chief executive officer of the manager of Keppel DC Reit, said she remained &ldquo cautiously optimistic in terms of growth opportunities&rdquo despite rising interest rates.
&ldquo There are still opportunities in the market that we are evaluating currently, but we maintain that disciplined approach in approaching growth and acquisition opportunities,&rdquo Lee said in a briefing accompanying the results announcement.
The Reit manager noted that it will &ldquo continue to drive growth in its diversified global portfolio of data centres by strengthening its income resilience through acquisitions&rdquo .
&ldquo But we remain very cautiously optimistic because I think that it is important to be looking out for long-term sustainability of the income rather than just to look at short term asset under management (AUM) growth,&rdquo Lee added.
Amid concerns over possible headwinds due to a potential recession and slowdown in corporate spending, Lee said the Reit manager has not yet witnessed any reduction in demand for data centres in key markets.
&ldquo Keppel DC Reit is well-placed to capture opportunities from the positive industry trends. Market watchers have forecast strong continued growth of the colocation market driven by demand from large cloud and Internet companies as well as limited supply of data centres in key data centre markets,&rdquo she noted.
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spursfan
Supreme |
31-Jan-2023 17:29
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MEDIA RELEASE
Key Highlights
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| ($&rsquo 000) | 2H 2022 | 2H 2021 | Change % | FY 2022 | FY 2021 | Change % |
| Gross Revenue | 141,782 | 135,918 | +4.3 | 277,322 | 271,065 | +2.3 |
| Property Expenses | (12,472) | (11,598) | +7.5 | (24,777) | (22,911) | +8.1 |
| Net Property Income | 129,310 | 124,320 | +4.0 | 252,545 | 248,154 | +1.8 |
| Finance Income | 5,134 | 518 | > 100 | 9,254 | 558 | > 100 |
| DI | 93,714 | 87,350 | +7.3 | 184,872 | 171,606 | +7.7 |
| DPU([1]) (cents) | 5.165 | 4.927 | +4.8 | 10.214 | 9.851 | +3.7 |
| Distribution Yield([2]) (%) | 5.77 | 3.99 | 178bps |
(1) DPU was computed based on the DI to Unitholders after the deduction of Capex Reserves that has been set aside.
(2) Based on closing price of $1.770 and $2.470 per Unit as at 31 December 2022 and 31 December 2021 respectively.
https://links.sgx.com/1.0.0/corporate-announcements/BO251NP4TLZ3BCWU/745261_1.%20KDCR%202H%20and%20FY2022%20-%20Financial%20Highlights%20and%20Unaudited%20Results_MREL.pdf
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CLSA upgrades CLAR and Keppel DC REIT, issues downgrades on seven other S-REITs
Going into 2023, the Singapore REITs (S-REITs) sector may face growing scrutiny on their distribution per unit (DPU) resilience, say CLSA analysts Wong Yew Kiang and Mog Shi Xian. The sector may also see the possibility of asset write-downs from the expansion of cap rates, they add.
Earlier in November, the US Federal Reserve raised interest rates by 75 basis points, bringing the Fed funds corridor to 3.75% to 4%, which is in line with CLSA&rsquo s expectations, as well as that of the consensus.
According to Wong and Mog, CLSA&rsquo s economics team estimate that the US Fed is likely to see another tightening round past its meeting in February 2023. The economists&rsquo estimates have also shifted CLSA&rsquo s central case to include two more 25-basis point hikes in March and May 2023, which brings the brokerage&rsquo s terminal rate to 5.25% from 4.75%.
On the back of this, CLSA&rsquo s risk free rate assumption has also been lifted to 3% from 2.1% previously, slightly higher than the 30-year average of 2.68% but in line with the spot rate of 3.03%.
Should a cap rate expansion take place, REITs such as Mapletree Pan Asia Commercial Trust (MPACT), Keppel REIT and Suntec REIT will be the most vulnerable, note Wong and Mog. Suntec REIT, especially, is the most likely to have its gearing breach the regulatory limit of 50%, they add.
Conversely, REITs such as SPH REIT, CapitaLand Ascott Trust (CLAS), Keppel DC REIT, Frasers Centrepoint Trust (FCT) and CapitaLand Ascendas REIT (CLAR) will remain &ldquo comfortably&rdquo below the gearing limit.
Wong and Mog add that their DPU sensitivity to rising interest costs suggest &ldquo highest erosion for Suntec REIT and Keppel REIT at 15.4% and 8.7% under a 200-basis point interest rate stress test&rdquo .
Among the REITs, Suntec REIT was the most exposed to the rising interest costs with only 58% of its debt hedged with fixed rates. Conversely, Mapletree Logistics Trust (MLT) had the highest percentage of debt hedged with fixed rates among the S-REITs.
Manulife US REIT (MUST) and ESR-LOGOS REIT (E-LOG) stood out as having the highest all-in cost of debt at 3.3% while CLAS and SPH REIT had the lowest all-in cost of debt at 1.7% and 1.8% respectively.
&ldquo The ability of REIT managers to top up DPU with capital distribution will also be a key differentiator in 2023 in our view, and Keppel REIT is one of the REITs with scope for this,&rdquo the analysts write.
With the recent spotlight on interest coverage rate (ICR), Suntec REIT and MUST are &ldquo technically most at risk in this respect mainly owing to their high gearing&rdquo , they add.
In the office S-REITs subsector, the analysts are expecting rent growth for Grade A offices to contract some 5% y-o-y to $11.21 psf per month in 2023, down from an expected growth of 7.5% y-o-y, or $12.48 psf per month.
Within the retail subsector, the analysts have upped their growth forecasts for prime retail rents from 0% to 1% in 2023 due to the recovering leasing demand. They have, however, lowered their y-o-y growth forecast for the overall subsector to 1% in 2023, down from 3% previously.
Among the industrial S-REITs subsector, the analysts see rental reversions remaining positive in 2023 &ldquo but at a moderate pace&rdquo .
Factoring-in a higher risk free rate from 2.1% to 3.0% as well as borrowing costs, the analysts have lowered their DPU forecasts on average by 6% for the calendar year (CY) 2023 and by 13% for 2024.
They have also downgraded their recommendations on seven REITs &ndash E-LOG, FCT, Keppel REIT, MUST, MPACT, Mapletree Industrial Trust (MINT) and Suntec REIT &ndash to &ldquo accumulate&rdquo or &ldquo O-PF&rdquo , &ldquo reduce&rdquo or &ldquo U-PF&rdquo , &ldquo accumulate&rdquo , &ldquo accumulate&rdquo , &ldquo reduce&rdquo , &ldquo reduce&rdquo and &ldquo sell&rdquo respectively.
Two REITs, CLAR and Keppel DC REIT, were upgraded to &ldquo buy&rdquo and &ldquo accumulate&rdquo respectively.
Veteran
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Keppel DC REIT
Portfolio reconstitution paying off
■ 3Q/9M22 DPU of 2.585/7.634 Scts (+5.0%/+3.4% yoy) was in line at 25.5%/75.2% of our FY22F, lifted by acquisitions and reversions/escalations.
■ Earnings protected by FX hedge and ability to pass through higher utilities.
■ ReiterateAdd valuations attractive at 5.8% FY22F DPU yield, 1.3x P/NAV.
We keep our FY22-24F DPU estimates unchanged. We roll forward our estimates to FY25F. DDM-based TP falls from S$2.63 to S$2.12 as we factor in higher risk-free rate (from 1.6% to 2.9%) and COE (6.6% to 7.7%). We think that tenant stickiness due to the high cost of relocation and limited supply in the near term in KDC&rsquo s key markets will continue to underpin income resilience and positive reversions. Potential re-rating catalysts are faster pace of acquisitions while downside risks include larger-than-expected impact from higher electricity cost, higher cost of funds an d softer data center demand. Remarks : Not vested. Just sharing. Pls DYODD. Not a recommendation to buy or sell.
Supreme
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DBS still sees upside for Keppel DC Reit despite rising costs
EVEN as accretion from recent acquisitions for pure data centre play Keppel DC Real Estate Investment Trust : AJBU +2.3% (Reit) have been eroded by higher operating costs in recent times, the growing demand for data centres is set to push the Reit back onto its path for organic growth.
DBS group research on Thursday (Oct 27) lowered its target price from S$2.50 to S$2.20, as it maintained a &ldquo buy&rdquo call on the Reit. This comes as analysts believe that the impact of higher operating costs on accretive acquisitions have already been priced in and given the sector&rsquo s positive fundamentals, further growth can be expected for the Reit.
The research house noted that while financing costs for Keppel DC Reit inched up 2.3 per cent, this was largely mitigated by loans hedged to fixed rates. The Reit&rsquo s prudent hedging of foreign currencies also helped to mitigate impact from the recent fluctuations in foreign exchange.
With a current portfolio occupancy of 98 per cent, this represents the highest occupancy since the Reit&rsquo s listing in 2014.
&ldquo The continued strong demand for data centre capacity amid the prolonged Covid-19 outbreak and rise of the digital economy would support higher occupancies and revenues across its portfolio in the foreseeable future,&rdquo said the analysts.
Analysts were optimistic on an upside for the Reit even as they assume that close to S$92 million would be raised in FY2023 to fund the remaining payment for Guangdong DC 3. They believe the accretive acquisition would add to the Reit&rsquo s earnings and propel further growth in distribution per unit (DPU) in future.
Key risks however, include rising competition from larger third party data centre players which are also looking grow their footprint and attract tenants. This will in turn raise barriers to entry for Keppel DC Reit.
&ldquo With interest rates looking to continue rising and foreign currencies expected to remain depressed against the Singapore dollar, we believe there could be some downside risks in the coming years,&rdquo wrote the analysts in their report.
This led analysts to lower their DPU estimates by 9 per cent over the next two years as they lowered their target price to S$2.20, adding however that the new target does not reflect any further acquisition assumptions.
Still, with a forward yield of more than 5.7 per cent, DBS thinks the Reit is trading at a very attractive level and thus kept to its &ldquo buy&rdquo call on the counter.