The manager of Keppel DC REIT has reported a distribution per unit (DPU) of 5.049 cents for the 1HFY2022 ended June 30.
The half-year period’s DPU, which is 2.5% higher than the DPU of 4.924 cents in the 1HFY2021, was computed based on the distributable income to unitholders after the deduction of capital expenditure (capex) reserves that has been set aside.
Based on the REIT’s closing price of $1.97 per unit, its annualised distribution yield stands at 5.13%.
During the period, the REIT’s distributable income grew 8.2% y-o-y to $91.2 million, which was due to contributions from accretive acquisitions, which include the Eindhoven Campus, Guangdong Data Centre and the London Data Centre.
The higher distributable income was also attributable to the accretive investments such as the one in the NetCo bonds, which were issued by M1 Network. Asset enhancement initiatives (AEIs) at DC1 and the Dublin assets, as well as the completion of Intellicentre 3 East Data Centre in July 2021, in addition to contract renewals and client expansion, contributed to the higher distributable income for the 1HFY2022 as well. In addition, foreign exchange hedges had a positive impact on Keppel DC REIT's bottomline with realised gains of around $4.3 million.
In the 1HFY2022, Keppel DC REIT reported gross revenue of $135.5 million, up marginally by 0.3% y-o-y as revenue from both Singapore and Australia declined y-o-y.
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Revenue from Singapore fell 9.8% y-o-y to $71.8 million in 1HFY2022, which Keppel DC REIT’s manager attributed partly to the impact of DXC Technology Services. Tenant DXC Technology Services Singapore, a tenant at Keppel DC Singapore 1, and Keppel DC REIT are in litigation over DXC’s partial default of payment in connection with the provisioning of colocation services at Keppel’s DC Singapore 1 facility, according to a March 2022 announcement. The amount being disputed is approximately $14.8 million for the four-year period between April 2021 and March 2025.
Anthea Lee, CEO of Keppel DC REIT’s manager indicated that while rental reversions were positive for Singapore, she was unable to provide further details for competitive reasons. In addition, for the Singapore portfolio, there was a y-o-y impact of electricity tarriffs which had risen over a 12-month period based on 1HFY2022 compared to 1HFY2021. However the impact of electricity costs showed a negligible impact in 2Q2022 versus 1Q2022.
“We are trying our best every quarter, when we have lease renewal, to pass more costs to the tenant and we have done so in this quarter and we mitigated the impact of rising electricity costs on DPU. The way to look at this is 90% of costs can be recovered from customers. We will continue to push and see how we can be more power efficient and look at every opportunity to pass the cost to customers,” Lee says.
Property expenses rose 8.8% y-o-y to $12.3 million, due to higher expenses overall, including repairs and maintenance and other property-related costs.
Accordingly, net property income (NPI) fell by 0.5% y-o-y to $123.2 million.
The REIT’s earnings, or profit attributable to unitholders, increased by 5.5% y-o-y to $92.4 million.
Earnings per unit increased by 0.4% y-o-y to 5.38 cents on a basic and diluted basis.
Net asset value (NAV) per unit for the 1HFY2022 stood 2.2% y-o-y higher at $1.37.
As at June 30, the REIT’s aggregate leverage stood 70 basis points (bps) higher at 35.3%.
Cash and cash equivalents as at June 30 fell 3.9% y-o-y to $188.2 million.
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The distributions will be paid out on Sept 9.
In a separate announcement, the REIT manager says its wholly-owned subsidiary, KDCR Guangdong, has obtained a RMB480 million ($98.6 million) five-year credit facility in accordance to a facility agreement dated July 25.
The loan facility is guaranteed by Perpetual (Asia) Limited.
Under the terms and conditions of the facility agreement, the borrower has to prepay any outstanding loans within 10 business days should the REIT manager cease to be the manager of Keppel DC REIT and a subsidiary of Keppel Capital Holdings, or should Keppel Capital own less than 50% of the total issued share capital in the REIT manager.
Should the events above occur, the total level of facilities that may be affected is around $2.03 billion as at July 25.
Units in Keppel DC REIT closed 2 cents higher or 1.01% up at $2.01 on July 25.
