In the previous months, Keppel DC REIT has been making a few significant acquisitions, with a total value of up to $770m. The new properties include KDC SGP 4, DC 1 in Singapore, and Kelsterbach DC, a data centre in Germany. All three acquisitions are distribution per unit (DPU) accretive.
5 things that you need to know
1. Post-acquisition of $770m, with a gearing of 35%, Keppel DC REIT still has debt headroom of over $400 million. The management is looking to acquire more yield or DPU accretive acquisitions.
2. From a portfolio perspective, post-acquisitions, the portfolio of the REIT increases to $2.7 billion, while the occupancy rate of 96, up from the previous 94.5%.
3. Moving forward, the REIT's manager will continue to tap on the low financing cost and flexibility in debt financing to make more yield accretive acquisitions. The recent acquisition of a data centre in Germany shows that the REIT managed to acquire the quality asset from third party.
4. The REIT is recently included into the ERPA Nareit Developed Asia Index. This will improve the liquidity of the REIT as some of the exchange-traded funds or private equity that using the index as a benchmark would allocate some of their assets on Keppel DC REIT.
5. While the data centre segment is known as the next growth area, one of the risks is the short lifespan of data centres' infrastructure. It requires a significant amount of Capex and investment in maintaining infrastructures. The REIT may require additional funding which would then affect the gearing adversely.
Keppel DC REIT if one of the top performers in 2019. The REIT has been delivering strong returns to the investors. Both the DPU and share price are in the uptrend since its IPO. If you are comfortable with a 3.8% yield, Keppel DC REIT is something that you can consider in your portfolio.
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