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How Keppel DC REIT’s S$5 Billion Portfolio and Active Repositioning Fuelled 1H’25 Gains

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TL;DR

  • Keppel DC REIT achieved a robust 12.8 % year-on-year increase in distribution per unit (DPU) to S$0.05133 for 1H 2025, propelled by strategic acquisitions (Keppel DC SGP 7 & 8, Tokyo Data Centre 1) and strong rental reversions.
  • Revenue and net property income surged (34.4 % and 37.8 %, respectively), contributing to a S$127.1 million distributable income.
  • With S$5 billion in global data-centre assets and active portfolio optimisation—including divestments and future hyperscale acquisitions—the REIT is well poised for continued value creation.
  • The annualised distribution yield stands at approximately 4.4 %.

Financial Highlights – Momentum Consolidated

  • Distribution per Unit (DPU) up 12.8 % to 5.133 cents (S$0.05133) for the half-year ended 30 June 2025

  • Distributable Income surged 57.2 % year-on-year to approximately S$127.1 million 

Revenue and Profitability

  • Gross revenue rose 34.4 % to S$211.3 million.

  • Net property income (NPI) climbed 37.8 % to S$182.8 million, signalling strong operational performance

Financial Strategy

  • Finance costs dropped 5.3 % to S$24.5 million, helped by lower interest rates and loan repayments 

  • Cost of debt averaged a lean 3.0 % in 1H 2025

Distribution Yield

  • Based on the closing unit price of S$2.33 as at 30 June 2025, the annualised yield stands at around 4.41 %
     

Portfolio Scale, Acquisitions & Reversions

  • The REIT manages a S$5 billion global data-centre portfolio, spanning 25 centres across 14 cities in ten countries as of end-2024 

  • Key acquisitions—Keppel DC Singapore 7 & 8, and Tokyo Data Centre 1—made significant contributions to income growth

  • Achieved ~51 % portfolio reversion in rental renewals, demonstrating pricing power and demand resilience

A view of Keppel signage outside their building in Singapore

Active Portfolio Optimisation

  • Occupancy remained healthy at 95.8 % as at 30 June 2025, with a robust WALE (by lettable area) of 6.9 years

  • The REIT undertook divestments of Intellicentre Campus and Kelsterbach Data Centre, and plans to complete divestment of Basis Bay Data Centre by 3Q 2025 

  • Future strategy includes:

    • Securing 100 % interest in Keppel DC Singapore 7 & 8 and land lease extensions in 2H 2025.

    • Exploring hyperscale data-centre acquisitions in Japan, South Korea, and Europe

Strategic Implications for Singaporean Investors

  1. Value Signal: The DPU rise alongside strong income growth reflects effective asset management and tenant demand resilience—encouraging trends for income-focused portfolios.
  2. Forward Momentum: With ample debt headroom (~S$898 million) and a low cost of debt, Keppel DC REIT is well positioned to execute further acquisitions and capitalise on AI-driven data-centre demand
  3. Diversification & Resilience: Geographic dispersion and tenant contract strategies enhance portfolio stability amid global economic shifts.

Key Metrics Snapshot (1H 2025 vs 1H 2024)

Metric 1H 2024 1H 2025 Year-on-Year Change
DPU (cents) 4.549 5.133 +12.8 %
Distributable Income (S$M) 80.878 127.128 +57.2 %
Gross Revenue (S$M) 157.180 211.309 +34.4 %
Net Property Income (S$M) 132.649 182.813 +37.8 %
Finance Costs (S$M) 25.907 24.544 −5.3 %
Cost of Debt (average) — 3.0 % n/a
Portfolio Reversion — ~51 % n/a
Yield (annualised) — ~4.4 % n/a

FAQ – What Singapore Investors Want to Know

Q1: What drove the DPU increase?
Mainly new income from acquisitions (SGP 7 & 8, Tokyo DC 1), strong rental reversions, lower interest costs, and robust operational revenue.

Q2: Is the REIT over-leveraged?
Not currently—cost of debt has reduced, and the REIT retains substantial debt headroom (~S$898 million) for further growth 

Q3: How resilient is the portfolio?
With ~S$5 billion in assets across 10 countries and long WALE, the portfolio remains diversified and resilient against localized shocks.

Q4: What’s next for acquisitions?
The manager is targeting full ownership of SGP 7 & 8, land lease extensions, and is pursuing hyperscale data-centre opportunities in key markets.

Q5: What does a 4.4 % yield signify?
It’s a competitive yield in the Singapore REIT landscape, especially when backed by growth in income and active asset management.

This is an AI-powered article, curated by The Financial Coconut. 

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