OCBC Investment Research has maintained a ‘Buy’ rating on Singapore-listed Keppel DC REIT.
In an investment report issued on 18 October, OCBC highlighted the REIT’s 3Q 2016 results that came within expectations despite gross revenue falling by 12% year-on-year to SGD22.7 million.
On the same day that the results were released, Keppel DC REIT also announced plans to acquire a stake in a Singapore data centre property, which will be funded via a preferential offering exercise.
The offering seeks to list 242 million new units that would be offered to existing unitholders, on the basis of 274 new units for every 1,000 units in Keppel DC REIT, at an issue price of SGD1.155.
“Taking these developments into account, we lower our FY16 DPU forecast by 8.3%, as the unit base will be enlarged before contribution from the [target property]kicks in”, said OCBC Investment Research in the report, adding that its forecast for the REIT’s FY17 DPU remains unchanged.
“Given the series of robust acquisitions which would enhance Keppel DC REIT’s portfolio defensiveness and its healthier balance sheet, we lower our cost of equity assumption from 8.3% to 8.0%”, it said.
OCBC also added that it has raised the REIT’s fair value estimate to SGD1.35 from SGD1.30 previously.
Units of Keppel DC REIT finished the trading day more than 1.2% higher from its previous close on the Singapore Exchange to end at SGD1.26.