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Keppel DC REIT’s distribution per unit of 6.84 cents for the financial period ended 31 December 2015 was within expectations and two percent above IPO forecast due to lower-than-expected borrowing costs, higher variable rent from Singapore and new contribution from Intellicentre 2, according to Credit Suisse.
This comes after the REIT saw its net property income surpass its IPO forecast by 1.7 percent at S$91.3 million.
As such, the REIT’s annualised distribution yield based on the IPO offering price of $0.930 per unit stood at 7.0 percent, up from the forecasted 6.8 percent.
Meanwhile, Credit Suisse noted that the REIT “posted a fair value gain of S$41.8 million (+4.0 percent increase in asset value quarter-on-quarter) on its assets for its first revaluation exercise. Cap rates remained stable and management expects to continue to maintain the modest cap rates of eight to 12 percent used during IPO.”
It added that the REIT’s gearing was marginally lower quarter-on-quarter at 29.2 percent.
“Cost of debt remained stable at 2.5 percent while the proportion of fixed/hedged debt decreased three percentage points quarter-on-quarter to 87 percent.”
With this, Credit Suisse maintains its outperform rating on Keppel DC REIT.
“We have lowered our FY16-17E DPU by 1.3 to 2.4 percent to factor in lower occupancy at Citadel 100, our new TP is S$1.13 (from S$1.17).”
Valued at S$1.07 billion as at 31 December 2015, Keppel DC REIT’s portfolio consists of nine quality data centres across Asia Pacific and Europe, including its maiden acquisition of Intellicentre 2 in Sydney, Australia.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories emailnikki@propertyguru.com.sg
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