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Keppel DC REIT’s net property income increased by 3.6 percent to S$29.496 million in 1H 2016 compared to S$28.478 million in the corresponding period last year, while distribution per unit (DPU) rose 3.4 percent to 3.34 cents from 3.23 cents.
The net property income also exceeded the S$29.196 million forecast made during the trust’s initial public offering (IPO) by 1.0 percent.
According to a statement by its manager, Keppel DC REIT Management Pte. Ltd., the amount surpassed the projection with the contributions from Intellicentre 2 and higher finance income. Another factor is the lower finance costs and expenses, including property-related costs.
However, these were partially offset by a drop in variable income from the REIT’s Singapore properties due to lower power revenue charged and higher property-related expenses. It was also negatively affected by a client downsizing its requirements in Keppel DC Dublin 1 (formerly known as Citadel 100 Data Centre) (pictured) in Q1 2016.
For Q2 2016, distributable income rose 3.3 percent to S$14.749 million from S$14.272 million in the same period last year, while DPU climbed 3.1 percent to 1.67 cents from 1.62 cents.
A report from Credit Suisse also revealed that Keppel DC REIT’s portfolio occupancy improved by 0.3 percentage point (pp) to 92.3 percent on a quarterly basis as occupancy in Keppel DC Dublin 1 edged up by 2.9 pp to 55.3 percent with a renewing tenant taking up additional space of 1,600 sq ft.
Given the positive financial results, the research house maintained its ‘outperform’ rating on the REIT and adjusted its DPU forecast by -0.2 percent to 2.5 percent.
Moving forward, occupancy at S25 in Singapore is expected to rise, in light of an agreement with a major tenant who plans to occupy an additional 6,800 sq ft of space. Half of the space will be taken up in the second half of this year, while the rest will be occupied in 2H 2017.
The construction of Keppel DC REIT’s first German investment, the maincubes Data Centre, is also on track to be completed by the property seller in the second half of 2018.
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