Keppel DC REIT's 1Q FY24 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI have seen improvements YoY mainly due to the settlement sum from DXC, which amounts to 13.3 million, inclusive of GST. However, distributable income and DPU have declined mainly due to loss allowance from Guangdong DCs, higher finance costs and less favorable forex hedges.

Divestment

In April, KDC divested Intellicentre Campus at a significant premium to the original investment and valuation. A$ 90 million from the sales proceeds is reinvested into AU DC Note, which Macquarie Data Centres Group issued. This transaction is expected to be 0.7% DPU accretive.

Related Parties Shareholding

The shareholdings for sponsor and directors of REIT manager are relatively low.

Lease Profile

The occupancy rate is high, however there is a concentration of lease expiries in 2024. In addition, the weighted average land lease expiry is relatively short.

Debt Profile

The debt is 100% unsecured, and the interest coverage ratio is relatively high. While the WADM is relatively long, there is a concentration of maturities in 2027.

Diversification Profile

The portfolio demonstrates diversification in terms of properties but shows concentration in terms of tenants' contributions.

Key Financial Metrics

The property yield, operating distributable income on capital, operating distributable income margin and oprarting distribution proportion are relatively high.

DPU Breakdown

• TTM Distribution Breakdown:
• 96.6% from Operation
• 3.2% from Management Fees Paid in Units
• 0.2% from Income Support
• TTM Distribution = 97.1% of Distributable Income

Trends

• Uptrend: DPU from Operation, NAV per Unit, Committed Occupancy
• Flat: Operating Distributable Income Margin
• Downtrend: Adjusted Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital

Relative Valuation

• Dividend Yield - Above + 1SD for 1y & 3y; Average for 3y
• P/NAV - Below -1SD for 1y, 3y & 5y

Author's Opinion

Compared with the previous quarter, the increase in gross revenue and NPI is mainly due to the settlement sum from DXC. On the other hand, distributable income and DPU have declined sharply due to the loss allowance related to Guangdong DCs as well as higher finance costs and less favorable forex hedges. Regarding debt, only 4% would be expiring this year.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.