Keppel DC REIT (SGX: AJBU) is a real estate investment trust that is involved in data centres. Listed in December 2014, the REIT manages 14 data centres in Asia and Europe.
The REIT recently announced its first quarter results for the year ending 31 December 2018 (1Q FY18). Here, I will look at nine things that investors should know about its latest results.
1. In the latest quarter, gross revenue grew 17.9% year-on-year to S$38 million while net property income improved by 18.2% during the same period to S$34.1 million.
2. Distribution per unit (DPU) was down by 4.8% as compared to the same period last year. Excluding the one-off capital distribution, adjusted DPU was up 3.4% year-on-year to 1.8 cents.
3. Based on annualised DPU of 7.2 Singapore cents and the closing price of S$1.43 on 20 April 2018, the REIT has a trailing distribution yield of 8.2%.
4. As of 31 March 2018, the REIT’s gearing stood at 37.4%, which is a safe distance from the regulatory ceiling of 45%.
5. The REIT’s committed occupancy rate stood at 93.7% at the end of the quarter.
6. The weighted average expiry profile stood at 9.6 years by net lettable area, with 26.3% of leases to expire within the next five years. The rest will expire after five years.
7. In terms of rental income breakdown, colocation, fully fitted and shell & core accounted for 74.9%, 14.6% and 10.5% of rental income respectively.
8. Keppel DC REIT expanded into Germany with the completion of the acquisition of maincubes Data Centre on 30 March 2018. Also, it entered into a contract to acquire the remainder of the 999-year leasehold land interest in Keppel DC Dublin 1.
9. The REIT provided the following outlook:
“According to the Organisation for Economic Co-operation and Development (OECD)’s Interim Economic Outlook published in March 2018, the global economy is projected to continue expanding, supported by investment, trade and employment growth. However, the OECD cautioned that an escalation of trade tensions could dampen this outlook.
Demand for data centre space continues to be driven by the trend of enterprises moving towards digitalisation and data centre outsourcing, along with the exponential growth of data created from new technologies and the implementation of data sovereignty regulations. The increasing trend of cloud adoption will also generate demand for data centre space from cloud and service providers, as well as from enterprises. These are expected to fuel data storage requirements in key data centre hubs.
Building on its established track record and global client base, the Manager will capitalise on growth opportunities in the data centre industry to expand and strengthen Keppel DC REIT’s portfolio of quality assets.”
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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.