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

DBS Investment Research reiterated a ‘Buy’ rating on Singapore-listed data centre landlord Keppel DC REIT after the latter released its 1Q 2017 results.

Keppel DC REIT reported a 30.1% increase in gross revenue to SGD 32.2 million (USD23 million) for the quarter, mainly due to income from newly acquired properties in Singapore, Milan, and Cardiff.

Subsequently DPU for the period increased to 1.89 Singapore cents, up 13% from 1.67 cents in the corresponding period of 2016.

DBS opined that the REIT’s occupancy of 95.1%, and corresponding weighted average lease expiry (WALE) of 9.2 years, as healthy, and posited that the relatively low gearing of 27.9% puts the REIT in good stead for further growth.

“We believe more acquisitions are on the horizon, which should offset the otherwise weak rental growth in its Singapore portfolio”, said DBS, in an investment research note released on 18 April.

Target price on the REIT has been set at SGD1.30 with an estimated upside of a further 5.9%.

Keppel DC REIT finished the trading day about 0.4% higher from its previous close on the Singapore Exchange to end at SGD1.23.

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.