Keppel DC REIT's Second-Half DPU Falls 16.1% on Higher Property Expenses and Finance Costs

By Jace Dela Cruz

Jan 26 2024, 00:14 AM EST

Keppel DC REIT has faced a 16.1% to 4.332 cents decline in its distribution per unit (DPU) for the second half of the year ending December 31, 2023.

Keppel DC REIT's Second-Half DPU Falls 16.1% on Higher Property Expenses and Finance Costs — Keppel DC REIT has faced a 16.1% to 4.332 cents decline in its distribution per unit (DPU) for the second half of the year. ROSLAN RAHMAN/AFP via Getty Images

High Finance Costs and Loss Allowances of Keppel DC Reit

According to The Straits Times, the manager said Friday that the substantial drop in DPU is attributed to its second-half distributable income fall of 18.5% to $76.4 million on increased finance costs and loss allowances related to uncollected rental income from its three data centers in Guangdong, China.

The finance costs for this period experienced a notable increase of 43.5%, reaching $25.8 million, in contrast to the $18 million reported a year earlier.

Property expenses also surged by 85.6%, reaching $23.1 million, with $10.5 million designated as loss allowance for "doubtful receivables," accounting for the uncollected rental income from a China data center tenant.

During this period, gross revenue exhibited a marginal decline of 0.7%, settling at $140.7 million. Simultaneously, net property income (NPI) witnessed a more substantial drop of 9.1%, amounting to $117.6 million in the latter half of the year.

This decline was primarily attributed to reduced net contributions from Singapore colocation assets due to increased facility expenses.

2023 DPU of Keppel DC Reit

For the financial year 2023, Keppel DC Reit's DPU closed at 9.383 cents, indicating an 8.1% decrease from the 10.214 cents recorded in the previous fiscal year (FY2022).

According to The Straits Times, distributing income also experienced a decline of 9.3%, amounting to SGD 167.7 million for the year.

The full-year NPI saw a 3% contraction, reaching $245 million, despite a 1.4% rise in gross revenue, which reached $281.2 million. This dip in NPI was influenced by a notable surge of 46.3% in property expenses, reaching $36.3 million.

The financial performance metrics indicate the challenges faced by Keppel DC REIT during this period, emphasizing the impact of heightened finance costs and loss allowances on the overall distributable income and unit holder returns.