As at Feb 9, Guangdong Bluesea Data Development, the tenant at GDC 1, 2 and 3, has only settled RMB500,000 of the RMB48.3 million in arrears. Therefore, Chan thinks Bluesea will likely be unable to meet its rental obligations, and Keppel DC REIT will have to eventually replace the tenant.
To this end, PhillipCapital expects further loss provisions in the REIT’s FY2024. Chan points out that the REIT management is working with Bluesea on a recovery roadmap and is also reserving its rights to terminate the acquisition of GDC 3, adding that there is currently a RMB100 million deposit on the data centre.
After factoring in the default and eventual replacement of Bluesea, PhillipCapital has cut their FY2024, FY2025 and FY2026 DPU estimates for Keppel DC REIT by 14%, 11% and 8% respectively.
Chan notes that the REIT’s organic growth will stem from renewals in FY2024, given that 27.5% of leases expire next year. The analyst expects the trust to record portfolio rental reversions of about 4% for FY2024.
See also: OCBC’s CEO change ‘earlier’ than expected; Citi stays ‘neutral’ with target price 6.8% under
As at 11.51am, units in Keppel DC REIT are trading 3 cents higher or 1.72% up at $1.77.
