Earlier this afternoon (20 April 2022), Keppel DC REIT (SGX:AJBU), Singapore’s first pure-play data centre REIT which I have unitholdings to, held its annual general meeting (AGM) for the financial year ended 31 December 2021 (i.e. FY2021.)

Due to the current safe management measures that’s still in place, the meeting continued to be held online (no physical presence was allowed), and I’ve tuned into the meeting to keep myself updated on the latest developments from the REIT’s management.

During the meeting, I’ve also submitted 2 questions (one regarding the REIT’s declining growth in its gross revenue and net property income over the years, and one regarding the impact on higher electricity tariffs on unitholders’ distribution per unit) which were addressed by the CEO, Ms Anthea Lee, herself, which you’ll read about in this post, along with responses to other questions submitted by fellow attendees and a summary of Ms Lee’s presentation. On top of that, you can also find the results of the 6 resolutions put to vote during the meeting.

Let’s begin:

Summary of CEO Anthea Lee’s Presentation

Key Highlights of FY2021:

  • Ms Lee shared that the pandemic pushed up demand for data centres as a result of companies implementing remote working for their employees, the proliferation of e-commerce, as well as cloud computing.
  • She added that the REIT embarked on 4 DPU (distribution per unit) accretive acquisitions during the year (which is a record for the REIT, and this displays commitment by the REIT to continue making acquisitions for long-term growth), namely London Data Centre in the United Kingdom, Eindhoven Campus in the Netherlands, Guangdong Data Centre in China, as well as investment in bonds and preference shares issued by M1 Network Private Limited.
  • As a result of contributions from the above accretive acquisitions, along with the completion of asset enhancement initiative works, the REIT’s distributable increased by 9.4% to $171.6m (FY2020: $156.9m.) As a result, its DPU also grew by 7.4% to 9.851 cents (FY2020: 9.17 cents.) Based on the market closing price of $2.47 per unit on 31 December 2021, this translated to a DPU yield of 4.0%.
  • The REIT’s assets under management saw a 13.3% growth to $3.4bn, underpinned mainly by new acquisitions (described above) and portfolio valuation uplift.
  • Portfolio occupancy, at 98.3% as at 31 December 2021, was a record high for the REIT. It also had a long portfolio WALE (Weighted Average Lease Expiry) of 7.5 years by leased area, contributed by the REIT’s acquisition of data centre properties with long leases.
  • Balance sheet was strong with aggregate leverage at 34.6% (well below their internal cap at 40.0%), interest coverage ratio at 10.8 times, and average cost of debt at 1.6%.

Key Highlights for Q1 FY2022:

  • Distributable income and DPU increased by 5.9% and 0.2% year-on-year respective to $44.5m (Q1 FY2021: $42.0m) and 2.466 cents (Q1 FY2021: 2.462 cents) mainly due to recent data centre acquisitions and investment in debt securities (described in the previous section), partially offset by lower contributions from its Singapore assets as a result of provisions made for client payment under dispute at KDC SGP 1 and higher electricity costs.
  • Portfolio occupancy rate continue to remain high at 98.7%, along with a long portfolio WALE of 7.7 years (largely contributed by the data centre which the REIT recently acquired in London, which had a long WALE of 17 years.)
  • Balance sheet remains healthy with an aggregate leverage of 36.1%, high interest coverage ratio of 10.0 times, and low cost of debt at 1.8%. Ms Lee shared that 76% of the REIT’s loans had been hedged through floating-to-fixed interest rate swaps, with the remaining unhedged borrowings in Euro dollars. She added that the REIT will continue to monitor the situation and enter into favourable interest-rate swaps to manage its interest rate exposure.

Commitment to ESG Excellence:

  • Ms Lee updated that in February this year, the REIT had set up a dedicated Board ESG Committee to develop and articulate ESG strategy, provide oversight of sustainability initiatives across business operations, and review the implementation and integration of ESG Framework.
  • She added that Keppel DC REIT continues to remain committed to sustainability growth, and will communicate and work together with its internal and external stakeholders to achieve the ESG targets.

Outlook Ahead:

  • Ms Lee opined that the REIT is well-positioned to capture industry trends and strategic opportunities.
  • She added that the REIT has a track record of 7 years of sustainable growth, and moving forward, they will continue to look for opportunities to expand in Asia Pacific, Europe, and North America.
  • On top of its current presence in Singapore, Australia, Ireland, Germany, the Netherlands, China, United Kingdom, Italy, and Malaysia, the REIT is also looking at expanding into other target markets including Canada, France, Hong Kong, Indonesia, Japan, New Zealand, Norway, South Korea, Spain, Taiwan, Thailand, Sweden, Switzerland, and the United States.

Responses by the CEO to My Questions

I have submitted 2 questions during the AGM, and they are as follows (along with response by Ms Lee):

Question 1:

I note that the REIT’s financial performance (its gross revenue as well as its net property income) over the quarters have been on a downward decline – from double-digit percentage growths (around the range of 20+% to 30+%) in the earlier years, it has slowed to single-digit percentage growths, and recently in the fourth quarter, it has recorded a double-digit percentage decline (and the slowing growth in its financial performance is something that many unitholders, including myself, are very concerned about.)

As the REIT have a very healthy debt profile – with its aggregate leverage at 36.1% as at 31 March 2022, and its interest coverage ratio at 10.0x, it is more than capable of funding for further yield-accretive acquisitions to improve returns to its unitholders. That said, I’d like to find out whether or not there are any plans to do so in the coming quarters ahead (be it through ROFR from its Sponsor, or 3rd party acquisitions), along with any projections the management have in terms of its gross revenue and net property income growth in the coming quarters ahead.


Ms Lee shared that the REIT have been expanding itself over the last 7 years, where they grew from 8 IPO assets to 21 assets currently, and that moving forward, the REIT will continue to pursue acquisition opportunities to grow and maintain a strong portfolio (and return for its unitholders.)

She also highlighted that the REIT’s DPU over the last 7 years have continued to record a stable growth.

Question 2:

Electricity costs are currently on the rise, and it’s expected to go up further in the coming months as oil prices continue to climb. I understand that some of the costs will be passed on to its tenants. That said, may I know what is the percentage out of the total electricity expense which the REIT have to bear? Is there an estimate that the REIT have to share with unitholders, to allow us to better gauge the impact it will have on the distributable income.


Ms Lee shared that electricity costs have increased by 27% in the first quarter of FY2022 (compared to the first quarter of FY2021.) Despite of that, it did not have a significant impact on its DPU (where it has continued to grow on a y-o-y basis.) She explained this was due to the REIT passing through a bulk of the cost to its clients. She also shared that power costs are subjected to negotiation with its clients and the REIT can always negotiate for more favourable contracts such that its DPU will not be negatively impacted.

Responses to Other Questions by AGM Attendees

  • On a question pertaining to the extent which the REIT’s financial performance will be impacted by the increase in carbon tax, and also on whether or not there are any measures in place to mitigate its impact, Ms Lee shared that there are 2 types of leases – Master Leases as well as Co-location leases – for the former, clients will negotiate their electricity contracts directly with the supplier and as such, the increase in carbon tax will have no impact to the REIT; for the latter, where most of the clients are in Singapore, contracts are as such where power costs are largely on a “pass-through” basis. Also, as these co-location leases are shorter (generally 2-3 years on average), when it comes to contract renewal, the REIT can always negotiate for the higher power costs to be passed through to its clients. CEO Ms Christina Tan added that the REIT could also involve its Sponsor, Keppel Corporation, to look into other renewable forms of energy to power its data centres.
  • Another unitholder highlighted about the “provisions made for a client payment under dispute at KDC SGP 1” in its Q1 FY2022 highlight which impacted its distributable income, and wanted to know whether or not there are any procedures in place to mitigate such risks, to which Ms Lee responded that the REIT have gone into a negotiation mitigation with the client and they now await decision from the courts and as such, she was unable to comment further. However, she assured the unitholder that this was a unique case, and that the REIT always have rights to protect their interests.
  • Finally, a unitholder wanted to know how many data centres have rental support currently, to which Ms Lee shared that there is a data centre in London that still has rental support of 0.5m in Sterling Pounds through to 2024.

Results of Resolutions Put to Vote during the AGM

  • Resolution 1, which is to receive and adopt the Trustee’s Report, the Manager’s Statement, the Audited Financial Statements of Keppel DC REIT for the financial year ended 31 December 2021 and the Auditor’s Report thereon, was passed with 99.77% of the votes for, and 0.23% of the votes against.
  • Resolution 2, which is to re-appoint Messrs PricewaterhouseCoopers LLP as the Auditor of Keppel DC REIT and authorise the Manager to fix the Auditor’s renumeration, was passed with 99.76% of the votes for, and 0.24% of the votes against.
  • Resolution 3, which is to re-endorse the appointment of Mr Kenny Kwan as Director, was passed with 89.52% of the votes for, and 10.48% of the votes against.
  • Resolution 4, which is to re-endorse the appointment of Mr Low Huan Ping as Director, was passed with 98.89% of the votes for, and 1.11% of the votes against.
  • Resolution 5, which is to re-endorse the appointment of Mr Dileep Nair as Director, was passed with 87.94% of the votes for, and 12.06% of the votes against.
  • Resolution 6, which is to authorise the Manager to issue Units and to make or grant convertible instruments, was passed with 93.17% of the votes for, and 6.83% of the votes against.

Disclaimer: At the time of writing, I am a unitholder of Keppel DC REIT.

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