Keppel DC REIT's 1HFY24 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI have improved YoY, primarily due to higher contributions from the existing portfolio and the settlement sum from DXC. However, distributable income and DPU have declined mainly due to loss allowance from Guangdong DCs, higher finance costs, and the depreciation of foreign currencies against SGD.

Acquisition

In July, KDC announced for maiden acquisition of Japan Data Centre in Tokyo. This acquisition is to be funded through debt and is expected to be completed in 3Q.

Divestment

In April, KDC divested Intellicentre Campus and reinvested A$ 90 million from the sales proceeds into AU DC Note.

Related Parties Shareholding

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

Lease Profile

Overall lease profile is in the median level, but with a relatively short weighted average land lease expiry.

Debt Profile

The debt is 100% unsecured, and the interest coverage ratio is relatively high. However, there is a concentration of debt 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:
• 94% from Operation
• 3.1% from Management Fees Paid in Units
• 0.2% from Income Support
• 2.7% being Retained

Trends (Up to 10 Years)

• Uptrend: DPU from Operation, NAV per Unit, Committed Occupancy
• Flat: Operating Distributable Income Margin, Operating Distribution Proportion
• Downtrend: Adjusted Interest Coverage Ratio, Property Yield, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital

Price Range & Relative Valuation Metrics

• Dividend Yield - Below -2SD for 1y; Below -1SD for 3y; Average for 5y & 10y
• P/NAV - Average for 1y, 3y, 5y & 10y

Author's Opinion

Compared with the previous half year, the performance has improved due to the settlement sum from DXC received and positive reversion/escalation across the portfolio. For debt, there is no refinancing requirement in 2024 and only 7.3% of debt maturing in 2025.

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.