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

OCBC Investment Research has reiterated a ‘Buy’ rating on Singapore-listed Keppel DC REIT, citing growth potential in the demand for data centre properties.

This demand is underpinned by expected increases in data creation, and outsourcing, said the bank in an investment report on 3 April.

Citing figures from information consulting company BroadGroup, OCBC noted that this demand is expected to grow at a compound annual growth rate (CAGR) of between 4.7% to 14.7% in key cities that Keppel DC REIT is exposed to from 2016 to 2021.

In addition, OCBC also looks upon favourable on Keppel DC REIT’s weighted average lease expiry (WALE) of 6.9 years, making it one of the most defensive REITs in Singapore, the firm opined.

“Based on our forecasts, [Keppel DC REIT] is offering distribution yields of 6.1% and 6.3% for FY17F and FY18F, which is attractive relative to its peers’ Bloomberg consensus average yield of 3.8% and 4.1%, respectively”, said OCBC.

The bank has maintained a fair value estimate of SGD1.39 on the data centre REIT.

Keppel DC REIT finished the trading day about 0.4% lower from its previous close on the Singapore Exchange to end at SGD1.195.

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.