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Keppel DC REIT’s debt costs remain low, ICR high, but utility bills could rise

Goola Warden
Goola Warden4/19/2022 08:06 PM GMT+08  • 2 min read
Keppel DC REIT’s debt costs remain low, ICR high, but utility bills could rise
Keppel DC REIT's Eindhoven Campus
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Unitholders can’t fault Keppel DC REIT for its capital management which to date has been prudent. In 1QFY2022, aggregate leverage was 36.1%; cost of debt was just 1.8%; interest coverage ratio for the quarter stood at 10x; weighted average debt tenor is 3.8 years, and only 11.4% of debt is up for renewal this year.

Some 76% of loans are hedged through floating-to-fixed interest rate swaps, with the remaining unhedged borrowings in Euro. The portfolio's weighted average hedge tenor is 3.4 years. With the 76% hedge in place, a 100bps rise in the interest rates would only affect the remaining 24% unhedged borrowings. A 100 bps change would have an approximately 1% impact on 1Q2022’s DPU on a pro forma basis. Moreover, all foreign-sourced distributions have been substantially hedged till 2H2023.

Although revenue and net property income fell marginally, distributable income rose 5.9% to $44.5 million, and DPU was up marginally to 2.466 cents for 1Q2022.

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