Artificial Intelligence (AI) and Machine Learning (ML) have been prominent topics since the launch of ChatGPT, with a noticeable increase in companies incorporating these new technologies to enhance productivity.
Here’s the thing: AI and ML consume a lot of data.
For investors, data centres represent a way to participate in the rising demand for the storage capacity needed for these vast amounts of data.
Here are five Singapore REITs and business trusts that stand to benefit from this trend:
1. Keppel DC REIT (SGX: AJBU)
Asia’s inaugural pure-play data centre REIT, Keppel DC REIT, was listed on the Singapore Exchange in December 2014.
As of the end of December 2023 (FY2023), it owned 23 data centre properties across the Asia Pacific and Europe, valued at around S$3.6 billion.
The REIT reported a slight 1.3% year on year increase in gross rental income for FY2023 to S$277 million, contributed by existing and newly acquired properties.
Unfortunately, property operating expenses surged by 46% year on year to S$36 million due to allowances for receivables losses from its Guangdong data centres.
As a result, there was a 3% decrease in net property income to about S$245 million compared to a year ago.
Keppel DC REIT’s FY203 distribution per unit (DPU) dropped a little over 8% to S$0.09383.
2. Digital Core REIT (SGX: DCRU)
Sponsored by US-listed Digital Realty Trust Inc. (NYSE: DLR), the world’s largest data centre owner and operator, Digital Core REIT was listed in December 2021.
As of the end of December 2023 (FY2023), it owned stakes in 12 data centres valued at US$1.40 billion.
For FY2023, Digital Core REIT’s gross revenue fell by 9% year on year to US$102.6 million, largely due to rent adjustments and reduced utilities reimbursement.
Increased property taxes and expenses led to a 3% rise in property expenses compared to a year ago, resulting in a 9% year on year decrease in net property income to US$63 million.
As a whole, the REIT’s DPU fell by 7.0% year on year to US$0.0370 for FY2023.
3. Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust (MINT) has a diverse portfolio that includes industrial and data centre properties in Singapore, North America, and Japan.
In particular, data centres made up about 55% of its S$8.8 billion in assets as of the fiscal year ended 31 March 2024 (FY23/24).
MINT’s gross revenue for FY23/24 rose by 1.8% year on year to S$697 million, boosted by the newly completed Mapletree Hi-Tech Park @ Kallang Way, and the newly acquired data centre in Osaka, Japan.
However, a 5.6% year-on-year increase in operating expenses from higher property maintenance, taxes, and marketing costs led to a mere 0.6% rise in net property income to S$521 million.
For FY23/24, MINT’s DPU fell slightly to S$0.1343.
4. CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT (CLAR) is Singapore’s largest industrial and business space REIT, with its focus on technology and logistics properties in developed markets.
CLAR has data centres in Singapore, as well as in the United Kingdom/Europe, where it comprises 9% towards its total asset value of close to S$17 billion as of end-December 2023 (FY2023).
The REIT’s gross revenue for FY2023 climbed by 9.4% year on year to about S$1.5 billion, driven by newly acquired properties, a higher occupancy, and positive rental reversions achieved for its Singapore properties.
Property operating expenses jumped by close to 19% year on year to about S$456 million, as a result of higher utility expenses and higher property taxes in its Singapore properties.
As a result, its net property income improved by 4.6% compared to a year ago, ending the year at slightly above S$1.0 billion.
For FY2023, CLAR’s DPU declined by 4.0% year on year to S$0.1516.
5. CapitaLand India Trust (SGX: CY6U)
CapitaLand India Trust (CLINT), Asia’s first Indian property trust, primarily invests in business space properties in India.
As of the end-December 2023 (FY2023), CLINT’s portfolio comprises four data centre developments in Mumbai, Hyderabad, Chennai, and Bangalore.
Together, they contribute 6% towards its total asset value of close to S$3 billion.
CLINT’s total property income for FY2023 rose by 11% year on year to around S$234 million due to contributions from newly acquired properties, as well as higher rental income from existing properties.
Total property expenses, though, jumped by 24% year on year to about S$54 million from higher operations and maintenance expenses, as well as property management fees from existing and newly acquired properties.
Consequently, its net property income only improved by 8% year on year to around S$180 million.
For the full year, CLINT’s DPU fell by 21% year on year to S$0.0645.
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Disclaimer: Lim Jun Yuan owns shares of Keppel DC REIT, Mapletree Industrial Trust, CapitaLand Ascendas REIT, and CapitaLand India Trust.
