Keppel DC Reit expects demand to hold up in the Covid-19 pandemic

THE manager of Keppel DC Reit on Tuesday said that it expects demand for its service to hold up in the Covid-19 pandemic as data centres support mission-critical operations.

It added that it expects higher data traffic as well as an accelerated pace of cloud and technological adoption, as more people work and transact from home.

Giving an update on the impact of Covid-19 on global supply-chain concerns, it said that it is monitoring refurbishment works at Keppel DC Dublin 1, Keppel DC Singapore 5 and DC1.

Additional power capacity at Keppel DC Singapore 5 is already fully committed. The Reit is converting additional space at Keppel DC Dublin 2 into a data hall, expected to be completed in the first half of 2021.

Meanwhile, it has also implemented measures and controls to ensure that facilities continue to operate with zero downtime.

These include putting in place temperature screening, online health and travel declarations, social distancing and split-team arrangements as well as setting up alternative network operating centres at separate locations where practicable.

Prizing itself as a "resilient asset class that supports the digital economy",  the Reit sought to assure investors by saying that close to 70 per cent of its leases expire in 2025 and beyond, and that its returns remain stable and balance sheet, healthy.

Its low aggregate leverage of 32.2 per cent also provides financial flexibility for the Reit to pursue growth, it said.

At the same time, macro trends continue to work in its favour, it said.

For instance, mobile data traffic is expected to increase by 27 per cent annually from 2019 to 2025, and 5G connection is expected to generate 2.5 times more traffic than the average 4G connection, and take up 10.6 per cent of total mobile traffic by 2023.

Units of the Reit closed one cent lower at S$2.44 on Tuesday. Within the Reit sector, it is among those that have remained steady despite the recent market correction.