Keppel DC REIT Review @ 8 February 2023
Basic Profile & Key Statistics
- Main Sector(s): Industrial
- Country(s) with Assets: Singapore, Australia, Ireland, Germany, Netherlands, China, England, Italy & Malaysia
- No. of Properties (exclude development/associate/fund): 23
Key Indicators
Performance Highlight
Gross revenue and NPI improved yoy mainly due to contributions from Guangdong DC 1, 2 and building shell of Guangdong DC 3, London DC, Eindhoven DC, positive income reversions, as well as contributions following the completion of AEIs at DC1 and the Dublin assets, and the completion of IC3 East DC. Higher finance income mainly comes from income from NetCo bonds and coupon income from Guangdong Data Centre 3. The distributable units and DPU have improved as well.
Acquisition
The acquisition of the building shell of Guangdong Data Centre 3 was completed in Aug 2022. It is expected to be fully-fitted by 3Q 2023.
Sensitivity to Interest Rate
For every 1% increase in interest rate, the DPU impact would be 2.1% based on 3Q 2022 DPU.
Distribution Breakdown
- Distributable Income Breakdown:
- 97.1% from Operation
- 2.7% from Fees Payable/Paid in Units
- 0.2% from Income Support
- Distribution = 94.9% of Distributable Income
Related Parties Shareholding
- REIT Sponsor's Shareholding: Below median for more than 20%
- REIT Manager's Shareholding: Below median for more than 20%
- Directors of REIT Manager's Shareholding: Below median for more than 20%
Lease Profile
- Occupancy: ± 5% from median
- WALE: Above median for more than 20%
- Highest Lease Expiry within 5 Years: ± 10% from median; Falls in 2024
- Weighted Average Land Lease Expiry: Below median for more than 20%'
Debt Profile
- Gearing Ratio: ± 10% from median
- Cost of Debt: Below median for more than 10%
- Fixed Rate Debt %: ± 10% from median
- Unsecured Debt %: 100%
- WADM: Above median for more than 20%
- Highest Debt Maturity within 5 Years: Above median for more than 20%; Falls in 2027
- Interest Coverage Ratio: Above median for more than 20%
Diversification Profile
- Top Geographical Contribution: ± 10% from median
- Top Property Contribution: Below median for more than 20%
- Top 5 Properties' Contribution: Below median for more than 10%
- Top Tenant Contribution: Above median for more than 20%
- Top 10 Tenants' Contribution: Above median for more than 20%
Key Financial Metrics
- Property Yield: Above median for more than 20%
- Management Fees over Distribution: ± 10% from median; $ 6.67 distribution for every dollar paid
- Distribution on Capital: Above median for more than 20%
- Distribution Margin: Above median for more than 20%
Trends
- Uptrend: DPU, NAV per Unit, Occupancy, Distribution Margin
- Flat: Distribution on Capital
- Downtrend: Interest Coverage Ratio, Property Yield
Relative Valuation
- P/NAV: Average for 1y; Below -1SD for 3y; Below average for 5y
- Dividend Yield: Average for 1y; Above +1SD for 3y ;Above average for 5y
Author's Opinion
KDC has maintained its performance from the prior quarter, displaying its resilient fundamentals. In an effort to manage the rising electricity expenses, KDC has secured fixed tariffs for its colocation properties in Singapore and Australia, ensuring cost stability for 2 years starting January 2023 and November 2022 to December 2023 respectively. Additionally, more than 90% of electricity costs are passed through to colocation clients.
You could also refer below for more information:
SREITs Dashboard- Detailed information on individual Singapore REIT
SREITs Data - Overview and Detail of Singapore REIT
REIT Review - List of previous REIT analysis posts
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