9 Quick Things Investors Should Know About Keppel DC REIT’s Latest Earnings

Last week, Keppel DC REIT (SGX: AJBU) released its 2017 fourth quarter and full year earnings update. As a quick introduction, Keppel DC REIT currently owns 13 data centres across Asia and Europe.

Here are nine things investors should know about Keppel DC REIT’s latest results:

1. Gross revenue for the reporting quarter jumped by 37.2% year-on-year to S$36.83 million while net property income was up 30.9% S$32.65 million.

2. The top-line growth flowed to the bottom-line as the REIT’s adjusted distribution per unit (DPU) increased by 4.8% from 1.31 cents in 2016’s fourth quarter to 1.75 cents. The adjustments were for a preferential offering conducted in November 2016, and a one-off net property tax refund recorded in 2016. Without the adjustments, Keppel DC REIT’s DPU in the reporting quarter would still be 1.75 cents, but it would have been 33.6% higher than a year ago.

3. Based on Keppel DC REIT’s DPU of 6.97 Singapore cents for 2017 (excluding a capital distribution of 0.15 cents per unit seen during the year), and its closing unit price of S$1.41 as of 30 January 2018, the REIT has a trailing distribution yield of 4.9%.

4. As of 31 December 2017, the REIT’s gearing stood at 32.1%, which is a healthy distance from the regulatory gearing ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 92.6% as of 31 December 2017.

6. The weighted average lease expiry for Keppel DC REIT was 9.1 years at end-2017, with just 30.4% of its leases expiring within the next five years.

7. In the month of December 2017, Colocation, Fully fitted, and Shell & core types of leases accounted for 76.4%, 13.7%, and 9.9%, respectively, of Keppel DC REIT’s rental income.

8. In 2017, the REIT added Keppel DC Singapore 3 and Keppel DC Dublin 2 to its portfolio. The REIT’s portfolio is expected to increase in the second quarter of 2018 when it adds maincubes Data Centre, which is located in Germany. The data centre is currently under development.

9. In its earnings release, Keppel DC REIT gave some insightful comments on the state of its market and business:

“According to the World Bank’s Global Economic Prospects report released on 9 January 2018, global economic growth is projected to be 3.1% in 2018, following a stronger than expected recovery in 2017. While growth in the investment, manufacturing and trade sectors is expected to be sustained in the near-term, the World Bank cautioned about possible downside pressure from financial stress, increased protectionism, and rising geopolitical tensions.

Data from 451 Research indicates that the data centre demand drivers remain positive in many key data centre hubs, including cities such as Singapore, Sydney, and Amsterdam where Keppel DC REIT is invested in. Demand for data centre capacity is underpinned by the sustained growth of cloud service providers, as well as increased data storage and processing requirements due to end user adoption of new technologies, and data sovereignty regulations.

Keppel DC REIT remains well-positioned to benefit from the growth of the data centre industry, with its global client base and the Manager’s established track record. The Manager will continue to seek opportunities to capture value and strengthen its presence across key data centre hubs.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.