Keppel DC REIT's property in Tampines, Singapore, known as Keppel DC Singapore 2 (Photo: REITsWeek)

Singapore’s DBS Bank has maintained a ‘Buy’ rating on Keppel DC REIT, citing positive market dynamics and potential for further distribution growth.

In an investment report issued on 29 November, DBS described the counter as one of the few REITs in Singapore that is projected to deliver a compound annual growth rate (CAGR) of 5%.

The bank also highlighted Keppel DC REIT’s relatively low gearing of about 30%, and low cost of capital, as indications that the data centre REIT is in good stead to make accretive property acquisitions.

“The SGD279.5 million (USD195 million) in new equity raised improved the REIT’s liquidity, and further strengthened its balance sheet, positioning Keppel DC REIT for another year of strong growth driven from acquisitions”, said DBS.

The bank has set a target price of SGD1.33 on Keppel DC REIT, adding that forecasted dividend yields for the 2016-2017 financial years are likely to come between 5.8% and 6.1%.

Units of Keppel DC REIT finished the trading day 0.4% lower from its previous close on the Singapore Exchange to end at SGD1.205.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.