Keppel DC Reit posts 13.6% rise in H1 DPU

Singapore

KEPPEL DC Reit on Tuesday posted a distribution per unit (DPU) of 4.375 Singapore cents for the half-year ended June 30, up 13.6 per cent from 3.85 cents a year ago.

Distributable income rose 38 per cent to S$75 million, largely driven by the acquisitions of Keppel DC Singapore 4 (KDC SGP 4) and DC1 Singapore data centres in Q4 2019. Keppel DC Reit had raised S$478.2 million in September last year through a private placement and preferential offering to partially fund the acquisitions.

Net property income was 32.1 per cent higher at S$114.2 million, while gross revenue increased 29.8 per cent to S$124 million.

Gross rental income grew 31.7 per cent to S$120 million due to the acquisitions of KDC SGP 4 and DC1, as well as Kelsterbach Data Centre in Germany, completed on May 1, 2020. Other income of S$4.4 million was 6.9 per cent lower due to lower rental top up income recognised.

Property expenses were 8.1 per cent higher at S$9.73 million. This was mainly due to the acquisition of KDC SGP 4 and higher property-related expenses recorded at Keppel DC Dublin 2.

Portfolio occupancy was 96.1 per cent as at June 30, 2020, with a weighted average lease expiry (WALE) of 7.4 years.

Following the completion of the acquisitions of Kelsterbach DC and the remaining 999-year leasehold land interest at Keppel DC Dublin 1 in H1, the Reit's assets under management (AUM) as at June 30, 2020 was increased to S$2.8 billion. About 70 per cent of portfolio AUM is in the Asia-Pacific, of which 58.2 per cent is in Singapore. The remaining 30 per cent is in Europe.

The Reit has 2.6 per cent of total net lettable area (NLA) up for renewal in the second half of 2020. The manager has started engaging clients for early renewals and lowered the total NLA due for expiry in 2021 from 10.7 per cent as at end-2019 to 6.2 per cent as at June 30, 2020.

Net asset value per unit stood at S$1.17 as at June 30, 2020, up from S$1.14 as at end-December.

The Reit's average cost of debt was at 1.7 per cent per annum, and its interest coverage ratio was at 12.8 times as at June 30. Aggregate leverage was 34.5 per cent as at June 30, up from 30.7 per cent as at end-December.

Asset-enhancements works at Keppel DC Dublin 1 have resumed following the two-month lockdown by the Irish government, and are expected to be completed in H2. Additional space at Keppel DC Dublin 2 is currently being converted into a data hall, to be completed in H1 2021.

In Singapore, the additional power capacity at Keppel DC Singapore 5 has been fully committed by an existing client in the facility. Asset enhancement works at Keppel DC Singapore 5 and DC1 remain suspended. Tax transparency treatment for KDC SGP 4 has been obtained.

The manager said prospects for the data centre market remain robust, underpinned by strong digital trends such as rapid cloud adoption, smart technologies, big-data analytics and 5G deployment.

It noted that the widespread lockdowns due to the pandemic have accelerated the adoption of technology. "The data-centre industry remains resilient, supporting data storage and processing requirements of the digital economy," said the manager.

Unitholders can expect distributions to be paid on Sept 1, 2020.

Units in the Reit closed at S$2.75 on Tuesday, up S$0.09 or 3.38 per cent, before results were out.