SGX Market Updates

Author: SGX   |   Latest post: Mon, 29 May 2023, 6:07 PM


REIT Watch - Data Centre S-Reits Committed to Sustainable Growth

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Tenant breakdown

The data centre industry has experienced tremendous growth in the past 2 years, as businesses are faced with a sudden and increased need for greater cloud capacity to enable work-from-home arrangements.

According to Cushman & Wakefield's 2022 Global Data Center Market Comparison report, the top 10 markets with the greatest capacity under development include London, Northern Virginia, Silicon Valley, Atlanta, Chicago, Dublin, Hong Kong, Phoenix, Singapore and Jakarta.

The report also highlighted the 3 main types of challenges and responsibilities that data centre operators face. These include the ability to source for renewable energy, the ability to develop better methods of cooling servers and the ability to design more efficient facilities to meet the sustainability goals of clients and governments.

In Singapore, data centres accounted for 7 per cent of Singapore's total electricity consumption in 2020.

Earlier this year, the moratorium on new data centres in Singapore was lifted, with certain criteria on energy efficiency.

Minister for Trade and Industry, Gan Kim Yong had said that the government had "to find a way to manage the growth of data centres in a sustainable manner consistent with our climate change commitments".

SGX lists several Reits with substantial data centre assets, including Mapletree Industrial Trust,  Ascendas Reit and 2 pure play data centre Reits - Keppel DC Reit and Digital Core Reit. 

Keppel DC Reit (KDCReit), Asia's first pure-play data centre Reit, has 21 properties located across 9 countries in Asia-Pacific and Europe.

The Reit also has the right of first refusal for S$2 billion of potential data centre assets for acquisitions through its sponsor, Keppel T&T as well as Keppel's private data centre funds.

In its most recent FY21 results, KDCReit posted a record high portfolio occupancy of 98.3 per cent and announced distribution per unit (DPU) of 9.851 cents, representing a 7.4 per cent year-on-year growth.

The Reit has also committed to progressively reduce its combined Scope 1 and Scope 2 emissions with an aim to halve it by 2030 from a 2019 baseline.

It also aims to introduce renewable energy to at least 50 per cent of its colocation assets by 2030, as well as encourage the use of renewable energy at all other portfolio assets.

Digital Core Reit, which listed on the SGX in 2021, has a portfolio of 10 data centres across the United States and Canada.

The Reit's core strategy includes investing in high-quality assets with strategic locations generating long-term pricing power and well-maintained physical structure.

Digital Core Reit has projected a DPU of 4.18 US cents for FY2022 and guided for a 5.3 per cent DPU growth in FY2023.

The Reit has committed to delivering sustainable growth for all stakeholders and aims to reduce Scope 1 and 2 emissions by 68 per cent and Scope 3 emissions by 24 per cent by 2030.

REIT Watch is a weekly column on The Business Times, read the original version.

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Keppel DC Reit 2.10 -0.02 (0.94%) 2,088,200 
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CapLand Ascendas REIT 2.69 -0.02 (0.74%) 6,243,200 
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