Keppel DC REIT (KDCREIT SP) - DBS Research 2017-09-13: Acquisition Of Dataplex In Dublin

Keppel DC REIT (KDCREIT SP) - DBS Vickers 2017-09-13: Acquisition Of Dataplex In Dublin KEPPEL DC REIT AJBU.SI

Keppel DC REIT (KDCREIT SP) - Acquisition Of Dataplex In Dublin

  • Acquisition price agreed at €66.0m (or c.S$101.3m).
  • Fully funded by debt, pushing FY18 aggregate leverage above 40% after the committed purchase of maincubes (Germany).
  • We estimate asset’s NPI yield to be 7.5% and FY18F DPU accretion of around 5.5%.
  • Target Price increased to S$1.44, maintain BUY.

What’s New 

  • Keppel DC REIT (KDCREIT) will acquire Dataplex, its second co-location data centre in Dublin, Ireland, at an agreed value of EUR 66.0m (approximately S$101.3m). The acquired asset which started operations in 2013 has 25,200 sqft of NLA, and is located at unit B10 of the Ballycoolin Business and Technology Park in Dublin, about 12km from the city centre.
  • Assets under management has increased to c.S$1.53bn with aggregate NLA of 917,240 sqft across 13 data centres (excluding maincubes) after the acquisition.
  • We estimate the NPI yield of the new asset to be 7.5% and contributions to be immediately accretive to DPU. FY18F DPU is projected to be lifted by 5.5% to 7.72 Scts, representing a yield of 5.9% based on the current price.
  • The acquisition will be 100% funded by debt. After the committed purchase of maincubes (Main, Germany) in 2018 upon its legal completion, aggregate leverage is expected to surpass 40%. We believe future acquisitions are likely to tap on equity fund raising, which implies potential DPU dilution.
  • This new asset has a long weighted average lease expiry (WALE) of 11.01 years and is 87.3% leased to leading global internet enterprise, IT services and telecommunication clients.
  • Target Price raised by 2.9% to S$1.44 from S$1.40. Maintain BUY.

Singapore Research DBS Vickers | Derek TAN DBS Vickers | 2017-09-13
DBS Vickers SGX Stock Analyst Report BUY Maintain BUY 1.44 Up 1.40