Keppel DC REIT: Announced that it has agreed to acquire the Intellicentre 2 asset for A$43.3m ($45.9m). The acquisition represents the first since IPO, and third in Australia.
The acquisition will be debt funded, lifting net gearing from 26.7% to 29.9%, and is expected to complete in 3Q16.
The property will provide an initial NPI yield of 7.2%, and is expected to be yield accretive. Deutsche estimates that the acquisition will increase FY16 DPU by 1.6%, assuming 30% onshore AUD funding at 3.75% and 70% SGD funding at 2.75%.
House believes that Keppel DC REIT remains well positioned for growth, with an additional $50-70m in debt headroom before reaching its 35% limit. Accounting for the latest acquisition, Deutshce raised its TP slightly to $1.15, translating to an attractive 6.2% yield for FY15, 6.6% for FY16.
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