QUOTE(Hansel @ Aug 29 2017, 02:10 PM)
How do you mean, bro,... by high capex once the lease is finished ? Is it that the trustee-mgr need to renovate again at high cost with additional tech specs before renting out to another tenant ? If the premise is not a BTS type, why shld additional specs be added ?
You can read some write up Kepple DC reit, I was also wanted to invest in that, but further reading makes me think twice. Especially the low yield and potentially high capex later which potentially can lower the dividend. (Same story with APTV). Kepple DC currently have 75% of the customers on co-location. 25% is on double and triple net lease (which is safe, as you are renting out the 'shell' only).
Servers do not come cheap, and being computers they have pretty short lifespan. After a customer leave, a new customers might demand faster processor, more storage, faster switches, bigger gigabit fiber etc etc. A server rack lifespan is about 5 years the most, i think. And old servers sells for peanuts..
A server building also require very good air conditioning to keep the racks cool, some even come with water circulation and backup genset. All these also have lower lifespan. You can say malls are also the same, but a server rooms runs on so much more heat than humans do..24 hours a day, the air conditioning on server farms are a beast.
http://investmentmoats.com/money-managemen...keppel-dc-reit/http://singaporeanstocksinvestor.blogspot....investment.htmlQUOTE
One note is that, as part of co-location, the customers require Keppel to provide servers. In this case, there may need to be some future capital expenditure unlike other kind of REITs
Different kind of co-location leads to different levels of rental rates. This can range from bare-bones co-location, telecom carrier based co-location and services based co-location. In the first instance, it is very commodity like, and commands the lowest value add, since the REIT is just renting the space based on per square foot or meters. For carrier based, the customer is renting based on connectivity and this as well as the serviced based co-location, is based on the level of capacity, connectivity, ,human factor, security.
Being previously part of situations where i deal with a bare bones data centre co-location service, there are hidden cost to the customer such as design, capacity, power and security and space management, not to mention that staff costs have to cater for routine maintenance, deployments as well as fast turn around.
"For Keppel DC REIT, depreciable infrastructure accounts for approximately 70% of the development cost, with the building shell accounting for the remaining 30%.". To be able to sell a depreciating asset at a premium to valuation is a wonderful thing. It is like selling a used family car at a premium to market price.
This post has been edited by gark: Aug 29 2017, 02:47 PM 
Jan 25 2017, 02:04 PM
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