SINGAPORE (April 18): OCBC Investment Research is keeping Keppel DC REIT on “buy” with an unchanged fair value estimate of $1.39 following 1Q17 results in line with expectations.
Keppel DC REIT’s 1Q DPU grew 13.2% to 1.89 cents, from 1.67 cents a year ago.
Distributable income increased 47.6% to $21.8 million in the first quarter ended March 31, largely attributed to the one-off capital distribution in relation to the Keppel DC Singapore 3 acquisition, income from the acquisitions announced last year, as well as lower property-related expenses and other expenses.
(See: Keppel DC REIT reports 13.2% growth in 1Q DPU to 1.89 cents)
Excluding the one-off boost from Keppel DC Singapore 3, OCBC lead analyst Andy Wong Teck Ching says adjusted 1Q17 DPU would have grown 4.2% y-o-y to 1.74 cents – constituting 23.8% of the research house’s FY17 projection.
“This robust growth was underpinned largely by inorganic growth,” Wong says in a report on Tuesday.
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He notes that Keppel DC REIT’s gross revenue and net property income grew 30.1% and 36.1% y-o-y to $32.2 million and $28.8 million, respectively. Overall portfolio occupancy also increased by 0.7 percentage point q-o-q to 95.1% as at end-1Q17.
“KDCREIT’s financial position remains healthy, with an aggregate leverage of 27.9% as at March 31, 2017, slightly lower than the 28.3% figure as at end-FY16,” Wong says.
As at 11.36am, units of Keppel DC REIT are trading flat at $1.23.
