KEPPEL DC REIT (SGX: AJBU) is the first pure-play data centre real estate investment trust (REIT) listed in Asia. The REIT’s sponsor is Keppel Telecom & Transport Ltd (SGX: K11). Recently, I looked at the REIT’s annual report for the financial year ended 31 December 2016 (FY2016) to understand more about its business. Here are some statistics that investors might want to know about from the report. Where does the REIT make money from? Keppel DC REIT’s portfolio, as at 31 December 2016, comprised of 11 data centres valued at around S$1.20 billion. With an aggregate lettable area of approximately…
Recently, I looked at the REIT’s annual report for the financial year ended 31 December 2016 (FY2016) to understand more about its business. Here are some statistics that investors might want to know about from the report.
Where does the REIT make money from?
Keppel DC REIT’s portfolio, as at 31 December 2016, comprised of 11 data centres valued at around S$1.20 billion.
With an aggregate lettable area of approximately 843,084 square foot, the portfolio spanned nine cities in seven countries. The countries in which the REIT has a presence in are Singapore, Malaysia, Australia, Ireland, Italy, the Netherlands and the United Kingdom.
Singapore and Malaysia contributed to 40.9% of the portfolio’s assets under management. Australia pitched in 25.4% while Europe took 33.7% of the pie.
The occupancy rate for the portfolio came in at 94.4%, as at 31 December 2016. Nine out of 11 data centres were fully occupied. A year ago, the occupancy rate stood at 94.8%.
The weighted average lease expiry (WALE) was 9.6 years, as at 31 December 2016, an improvement from 8.7 years, as at 31 December 2015.
How much money did the REIT make?
Gross revenue for FY2016 came in at S$96.1 million, slipping 3.3% as compared to the initial public offering (IPO) forecast. However, net property income rose 4.5% to S$90.9 million. Consequently, distributable income went up 4% to S$61 million.
Distributable income exceeded the IPO forecast largely due to one-off property tax refund, contributions from Intellicentre 2 Data Centre, higher finance income, as well as lower property-related and other expenses. These were partially offset by lower income from Keppel DC Dublin 1 and the data centres in Singapore.
How much did unitholders get?
Unitholders received a distribution per unit (DPU) of 6.14 cents for FY2016, a fall of 7.7% as compared to the IPO forecast. This translated to a distribution yield of 6.6% based on the IPO price of S$0.93 per unit.
DPU was lower than the IPO forecast and prior fiscal year’s 6.51 cents. This was mainly due to the impact of new units listed from the pro-rata preferential offering in November 2016, which were entitled to the distributable income for the second half of 2016.
What the future holds?
According to BroadGroup Consulting, new demand for data centres in Singapore is estimated to grow at a compounded annual growth rate (CAGR) of 23.6% between 2014 and 2021.
Over in Cyberjaya, Malaysia, new demand is projected to increase at a CAGR of 15.8% during the same time period.
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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 Sudhan P doesn’t own shares in any companies mentioned.