1 Stock In Singapore That Is Exposed To The Vast, Growing World Of Data

Our world appears to be increasingly data-driven. Technology consultant CSC predicts that there will be 35 zetabyes of data produced and stored in 2020, an expansion of over 40 times as compared to 2009.

To put the data numbers into perspective, a normal portable hard disk drive can store 1 terabyte of data. To reach 1 zetabyte, you will need 1 billion hard disk drives.

This apparent thirst for data storage has recently manifested in Singapore too. Earlier this month, the U.S.-based professional networking company LinkedIn unveiled its data centre here. The S$80 million data centre, which spans 23,500 square feet, will help store and process data from LinkedIn’s 85 million members in the Asia Pacific region.

A play on data

One stock in Singapore’s stock market that is involved with digital data is Keppel DC REIT (SGX: AJBU), the first pure-play data centre-focused real estate investment trust listed in Singapore.

According to the REIT’s latest earnings release for the first-quarter of 2016, its portfolio consists of nine data centre properties in six countries. The REIT has three data centres in Australia, two in Singapore, and one each in the United Kingdom, the Netherlands, Ireland, and Malaysia. These centres are collectively valued at S$1.07 billion and have a total lettable area of 597,900 square feet

In addition, Keppel DC REIT has the right of first refusal for two data centre assets in Singapore and one in the Netherlands. The REIT also has a data cente property in Germany that’s currently under development.

The REIT’s distributions per unit for the first-quarter of 2016 was 2.1% higher than its own forecast given in its IPO (initial public offering) prospectus and it currently has an occupancy rate of 92% for its portfolio.

Keppel DC REIT has a weighted average lease expiry (WALE) of 8.7 years at the moment. The lease expiry profile of a REIT is worth watching as it could affect future rental income. As a simple illustration of how the WALE works, if you lease 50% of your space to Tenant A for five years and 50% of your space to Tenant B for 11 years, your WALE would be eight years.

Meanwhile, Keppel DC REIT had ended the first-quarter of 2016 with an aggregate leverage of 29.6%. It’s not entirely an apples-to-apples comparison, but for some perspective, recent data from analysts show that REITs in Singapore had an average aggregate leverage ratio of 34.7% as of 30 September 2015.

Another interesting feature of Keppel DC REIT is the fact that the leases for its property portfolio have built-in annual rental escalations of between 2% and 4%.

Based on its current market price of $1.09, Keppel DC REIT has an annualised distribution yield of 6.1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.