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Brokers' take: DBS keeps 'buy' on Keppel DC Reit on asset quality

KEPPEL DC Reit has room for accretive acquisitions given its low cost of capital, said DBS Group Research on Tuesday as it kept its "buy" rating on the trust for data centres.

"Given the Reit's low cost of capital, the world is its playground for accretive acquisitions," said DBS, which has a target price of S$1.44 for the stock.

The brokerage is positive on the Reit's acquisition spree. Over the last 12 months, Keppel DC Reit has bought four new properties, located at Cardiff, Singapore, Milan and Dublin.

"We believe with stable growth in the existing portfolio, DPU (distribution per unit) growth will be led inorganically by acquisitions."

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Keppel DC Reit on Monday post a 16.8 per cent rise in its Q3 distribution per unit to 1.74 Singapore cents from 1.49 Singapore cents a year ago as acquisitions and more rental income helped to lift earnings.

For the three months ended Sept 30, 2017, the Reit's adjusted DPU stood at 1.74 Singapore cents, up from 1.67 Singapore cents the previous year.

As at 10.53am, the unit was trading at S$1.345, down half a cent.

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