Keppel DC REIT - OCBC Investment 2015-10-29: Proposed maiden acquisition in Germany

KEPPEL DC REIT AJBU.SI

Keppel DC REIT: Proposed maiden acquisition in Germany

Keppel DC REIT (KDCREIT) announced that it has entered into a forward sale and purchase agreement (SPA) to acquire mainCubes Data Centre in Germany for a purchase consideration of EUR84m (~S$130m). This marks its maiden entry into Germany.
The asset is a 4-storey fully-fitted data centre to be developed to Tier III specifications and would be completed n 2018 with a total lettable area of approximately 11,780 sqm. Upon completion, the facility will be fully-leased to mainCubes One GmbH (related party of vendor) under a 15-year triple-net lease with annual rental escalations and three 5-year renewal options.

KDCREIT will have to pay 10% of the purchase price as deposit on execution of the SPA, with the remainder due upon completion of the building. During the development period, the vendor will pay KDCREIT regular coupons, and hence this transaction is expected to be immediately accretive.
On a pro forma basis, this deal is estimated to provide a DPU accretion of 2.7% to KDCREIT.
Other benefits of this acquisition include lengthening its WALE from 8.9 years to 10 years and diversifying its income streams.
Maintain BUY rating and S$1.24 fair value estimate on the stock.

Wong Teck Ching Andy OCBC Securities | http://www.ocbcresearch.com/ 2015-10-29

OCBC Securities SGX Stock Analyst Report BUY Maintain BUY 1.24 Same 1.24