Keppel DC REIT - DBS Research 2022-07-26: Overcoming Hurdles And Staying Ahead

Keppel DC REIT's 1H21 Highlights

Distributable Income (DI) increased 8.2% y-o-y

• Growth in DI is mainly due to accretive acquisitions over the past year (Guangdong DC 1, Eindhoven DC, and London DC).
• Higher electricity cost had a negligible impact on earnings, as more than 90% of electricity costs are recoverable from tenants.

1H22 DPU of S$0.05049 up 2.5% y-o-y

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Portfolio occupancy remained strong at 98.2%.

• Only concern with occupancy is for Basis Bay in Malaysia. Occupancy for property fell to 40.2%; while tenants have renewed leases, they have taken on less space. The property only accounts for less than 1% of income; do not expect any significant impact to earnings.

All-in financing costs continue to inch up to 1.9%

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• Only ~S$40m of loans due to expire in FY22 (EUR-denominated loans). Loans expiring in FY23 amount to only ~S$170m (EUR and AUD denominated).
• With ~76% of borrowings hedged to fixed rates for an average tenor of 3.6 years, Keppel DC REIT does not expect any significant increase in financing costs in FY22F. The remaining unhedged borrowings are largely denominated in EUR. We estimate that every 100bps increase in interest rates will impact DPU by ~1.6%

Minimal impact from FX

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Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-07-26 SGinvestors.io

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