Keppel DC REIT's NPI up 26.8% to $43.23m in Q1 2019

The firm's data centre buys in Germany and Singapore pushed up earnings.

Keppel DC REIT’s net property income (NPI) grew 26.8% YoY to $43.23m in Q1 2019 from $34.1m, an announcement revealed. Revenue also jumped 26.4% YoY from $38.01m to $48.03m in Q1 2019.

Its distributable income to unitholders also climbed 29.9% YoY to $27.11m from $20.87m in 2018, whilst its distribution per unit (DPU) edged up 6.7% YoY from $0.018 to $0.0512.

The firm attributed its strong performance to the enlarged asset base following the acquisitions of maincubes Data Centre in Offenbach am Main, Germany, and Keppel DC Singapore 5 in 2018. However, the increase was partially offset by lower non-cash adjustment for straight-lining of rental as well as lower overseas contributions arising from the depreciation of AUD and EUR against the SGD.

Also read: Keppel DC REIT's NPI jumped 26% to $157.67m in 2018

As at 31 March 2019, portfolio occupancy rate remained healthy at 93.2%, and portfolio weighted average lease expiry (WALE) remained long at 8 years, according to Keppel’s financial statement. Its portfolio, with a size of approximately $1.97b, comprises 15 data centres in Singapore, Malaysia, Australia, UK, the Netherlands, Ireland, Italy and Germany.

During the quarter, Keppel DC REIT Management undertook retrofitting works at Keppel DC Singapore 3 to make way for expansion within a client’s premises. When completed in mid-2019, this is expected to increase the returns on this asset. Meanwhile, the power upgrading and fit-out works at Keppel DC Dublin 2 to make way for client expansion is on track for completion in H2 2019, and the asset enhancement works to improve energy efficiency at Keppel DC Dublin 1 is expected to be completed by 2020.

In terms of capital management, Keppel DC REIT Management issued $76.45m (EUR50m) in floating-rate notes due 2026 to provide the REIT with greater financial flexibility whilst diversifying the REIT’s sources of funding.

“With this, the REIT’s weighted average term to maturity has been extended to 3.3 years. The REIT’s average cost of debt remained competitive at 1.7% per annum and its interest coverage ratio remained high at 12.9 times,” the firm explained, adding that aggregate leverage remained low at 32.5%, providing the REIT with a healthy debt headroom to pursue further growth.

Also read: Can Keppel DC REIT stand its ground against multinational data centre players?

Looking ahead, Keppel DC REIT Management said it would continue to maintain its focused investment strategy to capture value and strengthen its presence across key data centre hubs amidst political uncertainties in Europe and weaker growth in China.