REIT-TIREMENT - REITs Investing & Personal Finance

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Tuesday, April 20, 2021

Keppel DC REIT Review @ 20 April 2021

Basic Profile & Key Statistics

Keppel DC REIT (KDC) is a data centre REIT that owns 19 properties across 9 countries.

Performance Review

Gross revenue, NPI, distributable income and DPU increased by 10.6%, 10%, 17.5% and 18.1% respectively, mainly due to contributions from acquisitions and AEI in 2020.
Development of IC3 Ease DC, AEI for DC1 and Keppel DC Dublin 2 are on track, which would improve KDC income for FY2021.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 20.94%
  • REIT manager's shareholding is low at 0.37%
  • Directors of REIT manager's shareholding is low at 0.04%

Lease Profile

  • Occupancy is high at 97.8%
  • WALE is long at 6.6 years (by NLA), it is lower if weighted by GRI
  • Highest lease expiry within 5 years is moderate at 27.9% which falls in this year
  • Weighted average land lease expiry is slightly short at 58.27 years

Debt Profile

  • Gearing ratio is moderate at 37.2%
  • Cost of debt is low at 1.5%
  • Fixed rate debt % is low at 67%
  • All debts are unsecured debts
  • WADM is moderate t at 3.1 years 
  • Highest debt maturity within 5 years is high at 34.6% which falls in 2025
  • Interest coverage ratio is high at 13.1 times

Diversification Profile

  • Top geographical contribution is slightly high at 60.9%
  • Top property contribution is low at 13.2% (by Valuation)
  • Top 5 properties contribution is low at 50.3% (by Valuation)
  • Top tenant contribution is high at 40% 
  • Top 10 tenants contribution is high at 79.7% 
  • Top 3 countries contribution is from Singapore, Australia and Ireland which contribute more than 80% of GRI

Key Financial Metrics

  • Property yield is high at 8.5%
  • Management fees over distribution is slightly low at 13.6% in which unitholders receive S$ 7.35 for every dollar paid 
  • Distribution on capital is high at 5.4%
  • Distribution margin is high at 56.6%

Trends

  • Uptrend - DPU, NAV per Unit, Interest Coverage Ratio
  • Flat - Property Yield, Distribution on Capital
  • Slight Downtrend - Distribution Margin


Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 9.547 cents / average yield @ 4.72% = S$ 2.02
  • Price/NAV - NAV @ S$ 1.18 x average P/NAV @ 1.58 = S$ 1.86


Author's Opinion

 Favorable Less Favorable
High OccupancyLow Sponsor's Shareholding
Long WALELow Manager's Shareholding
Low Cost of DebtLow Directors of REIT Manager's Shareholding
100% Unsecured DebtLow Fixed Rate Debt %
High Interest Coverage RatioConcentrated Debt Maturity
Low Top Property & Top 5 Properties ContributionsHigh Top Tenant & Top 10 Tenants Contributions
High Property Yield 
High Distribution on Capital 
High Distribution Margin 
DPU Uptrend 
NAV per Unit Uptrend 
Interest Coverage Ratio Uptrend

It is another solid quarter performance by KDC for 1Q 2021. Moving forward, KDC is expected to benefit from the contributions from the development and AEI. A thing to note would be 27.9% of leases (by GRI) would be expiring this year, which according to the presentation, KDC is proactively engaging tenants for lease renewals.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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