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2 Things Investors Should Know About Keppel DC REIT

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

There are two things shareholders and potential investors should know about the REIT right now: its latest financial performance and valuation.

Financial performance

First, a look at the numbers for the fourth quarter of the fiscal year ended 31 December 2018 (FY 2018).

Source: Keppel DC REIT Result Presentation

Keppel DC REIT delivered 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.

Valuation

There are two useful valuation metrics for assessing REITs. They are the price-to-book (P/B) ratio and the distribution yield.

The table below shows Keppel DC REIT’s P/B ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs in Singapore’s stock market.

Source: SGX StockFacts 

Keppel DC REIT’s valuation is higher than the market average due to its high PB ratio and low distribution yield.

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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.