Keppel DC Reit posts 9.9% drop in H1 DPU to S$0.04549
Distributable income falls 11.4% to S$80.9 million
KEPPEL DC Reit posted a 9.9 per cent year-on-year fall in distribution per unit (DPU) to S$0.04549 for the first half of the financial year ended Jun 30, from S$0.05051.
The manager of the real estate investment trust (Reit) attributed the lower DPU to loss allowance for the data centres of in Guangdong, China, higher finance costs and the depreciation of foreign currencies against the Singapore dollar.
Finance costs increased 14.1 per cent on the year to S$25.9 million from S$22.7 million.
However, this was partially offset by a S$13.3 million settlement sum received in relation to a dispute with DXC technology services, and “positive reversions and escalations”, which contributed to a rise in rents.
“Capitalising on the strong demand for data centres, healthy rates and positive reversions were secured for new and renewal contracts across (the Reit’s) portfolio in H1 FY2024,” the Reit manager noted.
In Singapore’s co-location market, the Reit achieved a positive reversion of 40 per cent for a major renewal contract.
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A co-location data facility is a data centre which rents out rack space to third-party businesses for their servers or other network equipment. These companies might not have the required resources to maintain their own centres.
Revenue was up 11.9 per cent to S$157.2 million for the half year, from S$140.5 million in H1 FY2023, said the Reit manager in a bourse filing on Friday (Jul 26).
Distributable income fell 11.4 per cent to S$80.9 million from S$91.3 million. The distribution will be paid on Sep 23, after the record date on Aug 5.
As at Jun 30, the Reit’s aggregate leverage was 35.8 per cent, 180 basis points lower than at Mar 31, 2024. Interest coverage ratio for the trailing 12 months stood at 5.1 times.
This was due to repayment of approximately S$58.5 million in loans and other euro-denominated debt.
The Reit recorded a portfolio occupancy of 97.5 per cent, with portfolio weighted average lease (Wale) by lettable area at 6.4 years.
On the other hand, Wale by rental income was 4.1 years, as a higher proportion of rental income hailed from co-location assets, which typically have shorter contractual periods, the manager noted.
Net property income rose 4.2 per cent to S$132.6 million from S$127.4 million.
Loh Hwee Long, chief executive officer of the Reit manager, said that the Reit’s performance for the half-year was complemented by its “strategic DPU-accretive transactions involving Tokyo Data Centre 1 and Intellicentre Campus”.
The Reit made its maiden foray into Japan this month, with the acquisition of Tokyo Data Centre 1 – the second-largest data centre hub in Asia, with a net lettable area of about 190,166 square feet.
Additionally, the Reit divested the Intellicentre Campus in Sydney, Australia, for A$174 million (S$153 million). This marks about a 150 per cent premium to the Reit’s original investment value into the data centre facility.
The Reit manager expects the reliance on data centre facilities to grow. This comes amid the growing demand and adoption of artificial intelligence products, as well as institutional investments into data centres, which are expected to continue this year.
Units of the Reit closed 1 per cent or S$0.02 lower at S$1.91 on Thursday.
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