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

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

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)

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.