Keppel DC REIT (KDCREIT) reported its 4Q15 results which met our expectations, but its DPU of 1.64 S cents came in slightly above management’s IPO forecast by 1.9%. However, gross revenue of S$24.8m was 2.1% below its projection. For FY15, KDCREIT’s gross revenue and DPU was 1.7% and 1.9% above its IPO forecast at S$107.7m and 6.84 S cents, and this constituted 103.4% and 100% of our forecasts, respectively.

Despite recent media reports of a large expected increase in supply of data centres in Singapore this year, we note that the fitting out period can take a very long time and hence the impact may not be as bad as it seems.

Nevertheless, we do expect rental reversions to moderate, although overall demand for data centre space is still healthy. Maintain our BUY rating and S$1.24 fair value estimate on KDCREIT

Source: OCBC Research - 15 Jan 2016