Keppel DC REIT’s Latest Acquisition: What Investors Should Know
Keppel DC REIT (SGX: AJBU) is the first pure-play data centre real estate investment trust (REIT) listed in Asia. Its portfolio currently comprises of data centres located in Singapore, Malaysia, Australia, Germany (under construction), Ireland, Italy, the Netherlands and the United Kingdom. The REIT’s sponsor is Keppel Telecom. & Transport. Ltd. (SGX: K11).
This morning, the REIT announced that it is expanding its footprint in Dublin, Ireland, by acquiring B10 Data Centre, its second colocation data centre in the city. The agreed value of the asset is €66 million (around S$101.3 million).
The data centre has a weighted average lease expiry (WALE) of around 11 years and has an occupancy rate of 87.3%. It is located in the Ballycoolin Business and Technology Park, Dublin, which is around 12 kilometres from the Dublin city centre.
Dublin is in an attractive position. According to an infographic by EY, the city is one of the leading financial centres in Europe for banking and financial services companies who wish to relocate from the United Kingdom post-Brexit.
Mr Chua Hsien Yang, Chief Executive Officer of the manager of Keppel DC REIT, said:
“This asset is a strategic addition to Keppel DC REIT’s portfolio given its strong tenant profile with a long WALE that provides income stability. Apart from enhancing its offering in a key data centre hub, the REIT will be able to reap operational synergies from its existing data centre, Keppel DC Dublin 1.”
The REIT used debt to fund the acquisition, and its aggregate leverage is expected to increase from 27.7% to 32.4%.
The acquisition is accretive to Keppel DC REIT’s distribution per unit (DPU). On a pro forma basis, for the full year ended 31 December 2016, the DPU would increase by 6%, from 6.14 cents to 6.51 cents.
Keppel DC REIT is currently going at S$1.29, translating to a price-to-book ratio of 1.36 and a trailing distribution yield of 4.9%.