Keppel DC Reit

Keppel DC Reit: DB initiates with Buy with TP $1.02. KDC Reit (KDC) is the first data center Reit in Asia, and focuses purely on quality data centre real estate assets with a global mandate. Initial portfolio consists 8 data centers in 6 countries across APAC and Europe, and is the largest asset value data center REIT in the APAC region. DB says around ~95%/~82% of KDC's FY15/16 gross rental income is derived from committed leases and co-localtion arrangements, providing stable base for the REIT's income. Annual step-ups in leases and stable reversions will provide a 4-5% annual growth. DB thinks there is a strong structural demand for data centers on the back of data creation and increased storage needs and cloud computing. KDC has room to grow given aggregate leverage of 26.4% (has $230m debt headroom before hitting 40% mark)