KEPPEL DC Reit is acquiring its first data centre in China for 635.9 million yuan (S$132 million), its manager said on Monday as it announced a 12.5 per cent growth in distribution per unit (DPU) to 4.924 Singapore cents for the first-half ended June 30, 2021.

The real estate investment trust (Reit) entered into agreements with Guangdong Bluesea Data Development and its parent company Guangdong Bluesea Mobile Development to acquire Guangdong Data Centre, a fully-fitted data centre facility in Jiangmen, Guangdong Province.

The seven-storey property will be fully leased back to Bluesea on a triple net basis for 15 years. It has a gross floor area of about 20,595 square metres and is situated within the Bluesea Intelligence Valley Mega Data Centre Campus.

The facility is the first of six data centre buildings to be completed. As part of the agreement, Keppel DC Reit will have the right of first refusal to acquire the remaining five data centres within the campus.

Guangdong Data Centre is located within the Greater Bay Area that has an ecosystem of startups, incubators and accelerators across various industry verticals. Among China's provinces, Guangdong has the highest share of large-scale data centres, commanding more than 20 per cent of the market, said the manager.

Keppel DC Reit separately posted a 12.4 per cent increase in distributable income to S$84.3 million. The growth was mainly driven by contributions from the accretive acquisitions of Amsterdam Data Centre and Kelsterbach Data Centre in Frankfurt, and the completion of the asset enhancement initiative works at Keppel DC Singapore 5 and Keppel DC Dublin 1 in the second half of 2020, and Keppel DC Dublin 2 and DC 1 in Q1 this year.

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Gross revenue climbed 9 per cent to S$135.1 million while net property income grew 8.4 per cent to S$123.8 million.

New, renewal and expansion leases with clients at the Singapore and Dublin data centres, including some leases which were renewed ahead of expiry, brought portfolio occupancy to 98 per cent as at June 30 with a weighted average lease expiry (WALE) of 6.5 years.

Including the latest renewal lease signed in July 2021, Keppel DC Reit has 0.8 per cent (by leased area) of leases due to expire for the remainder of the year.

The data centre acquisition in China is expected to be accretive to the Reit's DPU. Post-acquisition, the portfolio occupancy rate will increase to 98.2 per cent, and WALE will increase to 7.3 years.

The purchase consideration will be funded with a mix of debt and/or equity. The acquisition is expected to be completed in Q3 this year.

As at June 30, the manager has hedged 67 per cent of its borrowings as at June 30 through floating-to-fixed interest rate swaps, with the remaining unhedged borrowings denominated in euro.

The manager has also received commitments to refinance loans due in Q4 2021. As at June 30, the Reit's average cost of debt was at 1.5 per cent per annum and interest coverage ratio was at 12.9 times. Aggregate leverage stood at 36.7 per cent and is expected to increase to 37.5 per cent post-acquisition of the China data centre.

With the acquisition of Guangdong Data Centre, Keppel DC Reit will have a portfolio of 20 data centres across Asia-Pacific and Europe.

Distributions will be made on Sept 6.

The counter closed at S$2.56 on Monday, down 0.39 per cent or S$0.01.