Keppel DC REIT: Deutsche thinks that the REIT will continue outperforming with robust demand for data centre space and a solid acquisition pipeline. The key catalyst should be the acquisition of T27 and the following fundraising exercise, which should catalyse additional institutional interest. Potential further third-party acquisitions should also help drive strong DPU growth. Keppel DC REIT remains the top REIT pick for Deutsche.
Deutsche thinks that the acquisition could increase FY17 DPU by up to 4%. The sponsor’s acquisition and development of 20 Tampines St, set for completion in 2016, should also add to Keppel DC REIT’s pipeline.
The fundraising exercise following major acquisitions should also help increase lidquidity in the RIET, and catalyse investor interest.
Singapore’s robust infrastructure and connectivity are key demand drivers in the data centre space. Its 16 transnational undersea cables, combined with the government’s Smart Nation Initiative, intellectual property protection and fibre network have made the country one of the t op destinations of MNCs to locate upcoming Google data centre.
Deutsche believes that valuations a will remain attractive for Keppel DC REIT, which is
trading at 1.1x P/B and 6.9% FY16 yield
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