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Keppel DC REIT brimming with growth opportunities, but vulnerable to competition: DBS

Michelle Zhu
Michelle Zhu1/23/2019 11:38 AM GMT+08  • 2 min read
Keppel DC REIT brimming with growth opportunities, but vulnerable to competition: DBS
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SINGAPORE (Jan 23): DBS Vickers Securities is maintaining “buy” on Keppel DC REIT (KDC REIT) while raising its target price from $1.52 to $1.60, which is the highest on the street, after the REIT’s 4Q18 results came in line with the research house’s expectations.

The higher target price accounts for the recent positive tax transparency status for the trust’s stake in KDC SGP5, with its discount rate reflecting a refreshed 3% 10-year risk-free rate and a 50-bp increase in funding costs.

In a Wednesday report, analyst Derek Tan says he believes KDC REIT’s conservative gearing of 31% provides it with ample gearing capacity to fund opportunistic acquisitions as the REIT remains among one of the few in Singapore capable of making accretive acquisitions, supported by low cost of capital.

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