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Keppel DC REIT and Mapletree Industrial Trust ride on hot data centre market to come up tops

The Edge Singapore
The Edge Singapore • 3 min read
Keppel DC REIT and Mapletree Industrial Trust ride on hot data centre market to come up tops
Keppel DC REIT has kept its crown as the overall sector winner among all REITs in the Billion Dollar Club.
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Keppel DC REIT has kept its crown as the overall sector winner among all REITs in the Billion Dollar Club. At last year’s Billion Dollar Club, Keppel DC REIT, the first pure-play data centre REIT listed in both Asia and Singapore, was named the REIT with the best returns and overall sector winner. This year, Keppel DC REIT held on to these two wins and added fastest earnings growth as well.

Keppel DC REIT ticks two very big boxes for investors: It is plugged into a fast-growing and massive industry where digitalisation requires ever larger storage capacity that data centres provide. And as a REIT, it is generally favoured by investors here for the steady income distribution.

Over the three years taken into consideration, Keppel DC REIT chalked up a CAGR of 24% for both returns to shareholders, and earnings growth.

Keppel DC REIT was listed in December 2014, with an initial portfolio worth $1 billion, with eight assets in six countries. Since then, it has steadily expanded, adding assets in markets ranging from Ireland and Germany to Australia and Singapore.

See also: Keppel DC REIT acquires third data centre in the Netherlands for EUR37.2 mil

On July 26, Keppel DC REIT announced that it is paying $132 million for Guangdong Data Centre, a fully-fitted data centre in Jiangmen, Guangdong province in China, marking its expansion into China.

See also: Billion Dollar Club: Of SPACs and sweat equity

Situated within the Bluesea Intelligence Valley Mega Data Centre Campus, the facility is the first of six data centre buildings to be completed. As part of this agreement, Keppel DC REIT will have the right of first refusal to acquire the remaining five data centres within the campus.

Keppel DC REIT bought the data centre from Guangdong Bluesea Data Development Co (Bluesea) and its parent company, Guangdong Bluesea Mobile Development Co.

The data centre will be fully leased back to Bluesea on a triple net basis for 15 years. With a gross floor area of some 221,700 sq ft, the seven-storey data centre is designed in accordance with the highest standards in China for data centre construction.

See also: Booster shot by the ecosystem, for the ecosystem

With the acquisition of Guangdong Data Centre, Keppel DC REIT will have a portfolio of 20 quality data centres across Asia Pacific and Europe, worth around $3 billion.

Investors’ affinity for data centres, in a way, can be seen in Mapletree Industrial Trust (MIT) as well. One of the four listed REITs under Mapletree, MIT’s portfolio has a rapidly growing component of data centres, among its other industrial properties. This year, with an ROE of 8.3 times, it won this category.

As at June 30, MIT’s total assets under management was worth $6.7 billion. The portfolio comprises 86 properties in Singapore and 28 properties in North America — including 13 data centres held through the joint venture with Mapletree Investments. The range of properties in the portfolio ranges from data centres to high-tech buildings, business park buildings, flatted factories, stack-up/ramp-up buildings and light industrial buildings.

The most recent significant acquisition was in July when MIT spent some US$1.34 billion ($1.7 billion) to acquire a portfolio of 29 data centres in the US.

“The strategic addition of the portfolio of 29 data centres in key data centre markets in the United States will help strengthen MIT’s resilience with the increased freehold land component and long leases with annual rental escalations,” says Tham Kuo Wei, CEO of the manager.

“Our large and diversified tenant base as well as proactive portfolio rebalancing efforts will put MIT in a good stead to weather the uncertainties ahead,” he adds.

Photo: Keppel DC REIT

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