Keppel DC REIT posts 2H21 net property income fell 4 percent, missing Daiwa forecast

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Keppel DC REIT reported Monday its second half net property income fell 4.3 percent on-year to S$124.32 million, missing forecasts from Daiwa. 

Gross revenue for the six months ended 31 December slipped 4 percent on-year to S$135.92 million, the data-center focused REIT said in a filing to SGX. 

Daiwa had forecast net property income of S$134.7 million and gross revenue of S$150.6 million for the first half. 

The declines were “mainly due to lower rental non-cash income adjustment on a straight-lining basis, cessation of excess rent paid to the vendor at Kelsterbach DC, absence of one-off revenue and expenses reduction from the Singapore colocation assets and the divestment of iseek DC,” the REIT said. 

“This was partially offset by AEI [asset enhancement initiative] contributions from the Dublin and Singapore assets, full half year contribution from Amsterdam DC as well as acquisitions of Eindhoven DC and Guangdong DC,” the REIT said.

The REIT also pointed to higher manager’s fees, higher finance costs and higher tax expenses. 

DPU rises in 2H21

The distribution per unit (DPU) for the six-month period was 4.927 Singapore cents, up 2.8 percent on-year from 4.795 Singapore cents, the filing said, citing contributions from new acquisitions.

For the full-year period, net property income rose 1.6 percent on-year to S$248.15 million, on gross revenue of S$271.07 million, up 2.1 percent on-year, the REIT reported. 

“Higher gross rental income was mainly due to AEI [asset enhancement initiative] contributions from Dublin and Singapore assets, full year contributions from Kelsterbach DC and Amsterdam DC, as well as the acquisitions of Eindhoven DC and Guangdong DC,” the REIT said. “This was partially offset by the cessation of excess rent paid to the vendor at Kelsterbach DC, the divestment of iseek DC, and absence of one-off revenue and expenses reduction from the Singapore colocation assets.”

The DPU for the full year came in at 9.851 Singapore cents, up 7.4 percent on-year from 9.170 Singapore cents, the filing said.

Outlook

In its outlook, Keppel DC REIT said it was well-positioned to benefit from positive trends in the industry, citing data from real estate consultancies JLL and CBRE which pointed to continued strong demand for data centers in key global markets in 2022. 

“[Keppel DC REIT’s] strong operational expertise, extensive industry network and healthy balance sheet enable it to capture strategic opportunities as they arise. Keppel DC REIT will also leverage the Keppel ecosystem,” the filing said.

“Keppel DC REIT’s sponsor and Keppel’s private data center fund have more than $2 billion of assets under management and development. Keppel DC REIT may look to potentially acquire these assets if it is beneficial to the unitholders,” the filing said.

Keppel DC REIT’s portfolio is valued at around S$3.4 billion as of end-December, including mainly 20 data centers across Singapore, Malaysia, China, Australia, the U.K., the Netherlands, Ireland, Italy and Germany, as well as other investments.