Keppel DC Reit: Unrated report by Daiwa, citing that industry research suggests a rising need for data centres.
Keppel DC Reit is the first data centre REIT in Asia. Data centres are high-specification specialised facilities designed to house mission critical networking and computer equipment. Its closest competitors are other global data centre operators such as Digital Realty Trust, Equinix Inc and Global Switch.
Management noted high entry barriers to the data centre industry, with substantial upfront costs for building and fitting out data centres. It also highlighted the high level of technical expertise and experience needed for data centre operations to ensure no downtime for customers, who prefer providers with proven track records given the missioncritical nature of data centre usage.
Keppel DC Reit offers 6.4% and 6.7% DPU yield for 2015 and 2016, per prospectus.