Keppel DC REIT 3Q18 net property income rose more than 33 percent on acquisitions

A Singapore 10-dollar note Photo by Leslie Shaffer

Pure-play data center REIT Keppel DC REIT reported on Tuesday that its net property income for the third quarter rose 33.4 percent on-year to S$43.04 million after the acquisition of three facilities.

The rise in income was due to the acquisitions of Keppel DC Singapore 5, maincubes Data Centre, and Keppel DC Dublin 2 as well as higher variable income from the other Singapore properties, the REIT said in a filing to SGX after the market close on Tuesday.

Contributions from overseas also increased due to the appreciation of the euro against the Singapore dollar, it said, although that was partially offset by lower rental income from the Gore Hill DC property and a dent from the depreciation of the Australian dollar against the Singapore dollar, the REIT said.

Gross revenue for the quarter ended 30 September was up 34.0 percent on-year at S$47.56 million, while property expenses rose 40.2 percent on-year in the quarter to S$4.51 million, it said.

The distribution per unit (DPU) for the quarter was 1.85 Singapore cents, up 6.3 percent on-year, it said.

For the nine-month period ended 30 September, Keppel DC REIT reported net property income rose 24.6 percent on-year to S$115.21 million, while gross revenue increased 24.7 percent on-year to S$127.49 million, it said.

The DPU for the nine-month period was 5.47 Singapore cents, up 1.9 percent on-year from 5.37 Singapore cents in the year-ago period, it said.

Portfolio occupancy was at 93.1 percent as of 30 September, it said.

Outlook for Keppel DC

In its outlook, Keppel DC REIT pointed to continued demand for data center space in European and Asian hubs, amid demand from hyperscale could players, increasing digitization and cloud adoption, data center outsourcing and data sovereignty regulations.

“Keppel DC REIT, with its established track record and enlarged portfolio of assets, is well-positioned to benefit from the growth of the data center market,” the REIT manager said, adding it would continue to seek opportunities to strengthen its presence in key hubs.

It currently has 15 data centers in Asia Pacific and Europe, it said.

In August, the REIT manager entered a deal with Macquarie Telecom to build the REIT’s fourth data center in Australia, Intellicentre 3 East Data Centre, or IC3 East DC, on vacant land within the IC2 DC site in Sydney, it said. When it is completed, it will be fully leased to Macquarie Telecom on a 20-year master lease with built-in annual rental escalations and renewal options, it said, adding that it would enhance the REIT’s income stability.

“The addition of IC3 East DC is expected to be DPU-accretive, and will strengthen the REIT’s footprint in Australia, one of Asia Pacific’s fastest-growing data centre markets, underpinned by robust demand from MNCs and massive-scale cloud providers,” the statement said.

Get the Shenton Wire morning briefing in your inbox