The Motley Fool

3 Things Keppel DC REIT’s Management Wants You to Know About Its Business

Keppel DC REIT (SGX: AJBU) is a real estate investment trust (REIT) involved in data centres. Listed in December 2014, the REIT manages 15 data centres in Asia and Europe.

The manager of Keppel DC REIT gave a presentation on the REIT’s latest results, and in the presentation deck, I saw three slides on the REIT’s business I think investors should pay attention to.

First, a quick overview of the company’s latest quarterly results

Data source: Keppel DC REIT Result Presentation

Overall, the REIT had a positive quarter with all metrics coming in stronger on a year-on-year basis. The growth in net property income (NPI) was mainly due to contributions from new acquisitions in 2018, as well as higher contributions from some existing assets.

As of 31 December 2018, the REIT’s gearing and occupancy ratios stood at 30.8% and 93.1%, respectively.

Next, Keppel DC REIT’s asset breakdown by geography

Source: Keppel DC REIT Result Presentation

Here, we can see that the REIT’s assets are located in three main regions: South East Asia, Australia, and Europe. Of the assets under management, 52.4% are located in South East Asia, 32.6% in Europe, and 15.0% in Australia.

Having assets distributed in three different regions reduces the REIT’s concentration risk, and it also gives it exposure to both the developed and the developing economies across those regions.

Last but not least, Keppel DC REIT’s lease expiry profile

Source: Keppel DC REIT Result Presentation

There are three positives from the graph above.

Firstly, Keppel DC REIT’s weighted average lease to expiry is 8.3 years (by leased area). Secondly, only 7.4% of leases are set to expire in the next two years. Thirdly, more than 65.5% of the leases don’t expire until after 2024. That would mean that the REIT should have reasonable visibility of earnings for the foreseeable future.

Maximise dividends on your REITs with our brand-new Complete Guide To Buying The Best Singapore REITs. We reveal everything we think you need to know about finding the best REITs that hands you a fat dividend cheque ...even if you have no REITs experience at all! Get instant access to your 100% FREE, actionable, 42-page PDF guide here.

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.