: Keppel DC REIT's revenue slowed amidst payment dispute with Bluesea

Keppel DC REIT's H2 2023 results revealed that the company’s revenue slowed amidst payment issues with tenant Bluesea Data Development. The company’s revenue increased by 14 percent, but was slowed by a surge in finance costs by 56.1 percent.

Keppel recorded a decline in distributions per unit, representing an overall drop in 2023 of 8.1 percent. The company’s distributable income also fell by 9.3 percent to $125m. One of the highest factors which contributed to this was  Keppel's tenant dispute with Bluesea Data Development regarding the Guangdong DC1 and DC2 facilities, for which the data center REIT says owes Keppel around $6.8m for missed rental payments.

Keppel officially announced that it had issued a letter of demand to the customer for the payment on December 15, 2023. Citi Research analyst Brandon Lee noted at the time of the letter of demand, “[The] long-stop date of Oct 31 for Guangdong Data Centre 3’s (fully-fitted by 3QFY2024) framework agreement has passed and Keppel DC REIT has not extended it, hence it reserves right to cancel the deal, transfer core-and-shell to vendor and receive a refund of RMB100 million ($21.5m), but it has not exercised the right and is now working with advisors on its options.”