Keppel DC REIT's 4Q FY23 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue remains similar YoY, but NPI declined due to loss allowance for the uncollected rental from Guangdong DCs recorded in property expenses. Together with significantly higher finance costs, distributable income and DPU have declined YoY.

Related Parties Shareholding

The shareholdings for sponsor, manager and directors of REIT Manager are relatively low.

Lease Profile

The occupancy rate is high, and the Weighted Average Lease Expiry (WALE) is relatively long, albeit with a concentration of lease expiries in 2024. However, the weighted average land lease expiry is relatively short.

Debt Profile

The debt is 100% unsecured, and the interest coverage ratio is favorable. While the WADM is relatively long, there is a concentration of maturities in 2027.

Diversification Profile

The portfolio demonstrates diversification in terms of properties but shows concentration in terms of tenants' contributions.

Key Financial Metrics

The property yield, operating distributable income on capital, and operating distributable income margin are relatively high.

DPU Breakdown

• TTM Distributable Income Breakdown:
• 96.6% from Operation
• 3.2% from Management Fees Paid in Units
• 0.2% from Income Support
• TTM Distribution = 96.3% Distributable Income

Trends

• Uptrend: DPU from Operation, NAV per Unit, Committed Occupancy
• Slight Uptrend: Operating Distributable Income Margin
• Downtrend: Adjusted Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital

Relative Valuation

• Dividend Yield - Above +2SD for 1y; Above +1SD for 3y & 5y
• P/NAV - Below -2SD for 1y; Below -1SD for 3y & 5y

Author's Opinion

In comparison with the previous quarter, DPU has sharply declined due to the loss allowance related to Guangdong DCs. On the debt front, only 4% requires refinancing this year. According to the presentation, the Singapore High Court ruled in favor of KDC in the dispute with DXC, with the trial scheduled for February 2024. Regarding the Guangdong DCs, the tenant settled only S$ 0.1 million of rent in arrears in December, and the manager is working with the tenant on a recovery roadmap.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

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REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.