Keppel DC REIT’s net income inches up by 0.8% to $22.1m

On back of declining property operating expenses.

The real estate investment trust managed to eke out a marginal growth in its earnings even as gross revenue declined by 4.5% to $24.9m due to lower rental income at its Keppel DC Dublin 1.

According to a report by OCBC, the lower rental income was due to a client downsizing its requirements, a fall in variable income at its Singapore properties and depreciation of the AUD and GBP against the SGD.

However, the report added that property operating expenses declined by a larger magnitude of 32.7% and thus resulted in NPI growing 0.8% YoY to S$22.1m.

“On a 1H16 basis, KDCREIT’s gross revenue slipped 4.5% to S$49.6m and this constituted 47.2% of our FY16 forecast. DPU of 3.34 S cents represented growth of 3.4% and accounted for 48.2% of our full-year projection,” the report said.

Meanwhile, it managed to sign a forward renewal for one of its major contracts expiring in late 2017 at one of its Singapore Properties for a renewal of more than five years.

“This strategic tenant has also committed to expand its space by 6,800 sq ft in two phases (50% in 2H16 and 50% in 2H17). However, in order to secure this renewal and expansion, management had to offer the tenant a more competitive rental. As such, for the first year of the new lease term, net revenue is expected to decline by a low single-digit,” the report said.