Image Source: Business Times
Keppel DC REIT is acquiring a 100% freehold interest in a shell and core purpose-built data centre facility in Kelsterbach, Germany, for S$125.3m, which is 4.9% discount to the latest valuation.
4 Things You Need To Know About The Acquisition
1. This will be the REIT's second data centre in Germany and its eighth in Europe. Post-acquisition, the REIT's portfolio will expand to $2.7b, comprising 18 data centres globally.
2. With a total lettable area of 540,869 sf, the property is located near the Frankfurt Airport and 18km from the city centre. Besides being the financial hub in Germany, Frankfurt is also one of the world most established international connectivity hub. It attracts big scale of investments in cloud computing. The acquisition helps the REIT to capture the rising demand for data centres.
3. The freehold property is 100% occupied on a triple-net basis until 2025. This will improve the REIT's portfolio occupancy from 94.5% to 96%.
4. While the REIT's manager has not announced the funding details for the acquisition, but with a low gearing ratio of 30.3%, the REIT is likely to fund the purchase through debt financing.
Keppel DC REIT is currently trading at a yield of about 3.8% and a price-to-book ratio of 1.85 (almost 2 times!). Historically, the REIT has been building a strong portfolio with a track record of growing dividends. However, we think that the price is currently at the high side, with a lowest ever dividend yield and highest ever price-to-book ratio.
Want to know about the historical yield trend of the REIT? Join our Premium Subscription today to get a 50% discount on usual price!