Keppel DC (AJBU) H1 2024 earnings summary

Executive summary

• Gross revenue for 1H 2024 rose 11.9% year-over-year to $157.2m, driven by higher variable rent from a dispute settlement and strong positive rental reversions, including a major Singapore contract renewal exceeding 40% reversion.

• Net property income increased 4.2% to $132.6m, while profit after tax surged 39.8% to $114.6m, mainly due to a $31.6m gain from the divestment of Intellicentre Campus.

• Distributable income for 1H 2024 was $80.9m, with DPU at 4.549 cents, up 5.0% from 2H 2023 but down 9.9% from 1H 2023 due to loss allowance for Guangdong DCs and higher finance costs.

• Portfolio comprised 22-23 data centres across 10 countries, valued at $3.7b as at 30 June 2024, with Asia Pacific accounting for 72.9% of AUM and Singapore 52.9%.

• Active portfolio rebalancing included divestment of Intellicentre Campus, investment in Australia Data Centre Note, and announced acquisition of Tokyo Data Centre 1 in July 2024.

Financial highlights

• Gross rental income up 12.1% year-over-year to $154.7m, mainly from settlement sum and positive rental escalations.

• Property expenses rose 87.1% to $24.5m, largely due to loss allowance for Guangdong data centre receivables.

• Earnings per unit increased 39.7% to 6.54 cents.

• Net asset value per unit rose to $1.372 as at 30 Jun 2024.

• Settlement sum of $13.3m from the DXC dispute contributed to higher variable rent, with $11.2m distributable in FY2024.

Outlook and guidance

• Generative AI, cloud adoption, and digitalisation are expected to drive significant demand for data centres, with Asia Pacific colocation market projected to grow at a 13.3% CAGR to 2028.

• Portfolio performance anticipated to remain robust, supported by high occupancy and positive rental reversions.

• Singapore market remains tight with high occupancy and rising lease rates, but faces power constraints and sustainability requirements.

• Sustainability and regulatory frameworks are expected to become more stringent, influencing future operations and investments.

• Focus remains on strategic acquisitions, portfolio optimisation, and proactive asset management for sustainable value creation.