Keppel DC REIT dead set on reaching $2bn AUM by 2018

But it will have to acquire $600m worth of third-party assets.

While the supply glut continues to put pressure on Keppel DC REIT, it should remain focused in reaching its target of doubling its assets under management (AUM) to sustain growth.

According to CIMB analyst Yeo Zhi Bin, the group's growth will be driven by acquisitions. Keppel DC REIT has a target have its AUM reach $2 billion by 2018.

"Taking into account the rights of first refusal assets which could be injected by then, we estimate the REIT needs to acquire about S$600m worth of third-party assets," the analyst remarked.

With a larger AUM, the analyst said Keppel DC REIT could attract more institutional following and increase the stock's liquidity.

More so, the analyst also noted that Keppel DC REIT should not take its eyes away from its leasing activity, as it is expected to renew one of its Singapore leases in 3Q16.

"After somewhat underwhelming leasing activities in 1H16, we believe that this particular lease would be a strong reference point for investors to gauge the demand-supply dynamics of the Singaporean market," Yeo stated.

He explained that a positive rental reversion could underscore healthy demand mopping up supply glut. Otherwise, it would lean investors towards the idea of an over-supplied market.

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