Keppel DC REIT - DPU grows by 12.8% in 1H 2025

Insights

REITs

By Gerald Wong, CFA • 26 Jul 2025

Why trust Beansprout? We're licensed by the Monetary Authority of Singapore (MAS).

Comments

Keppel DC REIT reported distribution per unit (DPU) of 5.133 cents in 1H 2025, 12.8% higher year-on-year.

In this article

Higher distribution per unit

Keppel DC REIT's distribution per unit (DPU) increased 12.8% year-on-year to 5.133 cents in 1H 2025, due to contribution from newly acquired assets – KDC SGP 7 & 8 and Tokyo Data Centre.

Keppel DC REIT achieved a significant 51% rental rates uplift from contract renewals in 1H 2025.

Furthermore, Keppel DC REIT's finance costs fell by 5.3% year-on-year to S$24.5 million.

Strong portfolio performance

Revenue grew by 34.4% year-on-year to S$211.3 million in 1H 2025.

Net property income (NPI) rose by 37.8% year-on-year to S$182.8 million in 1H 2025. Amid the supply constraints in Singapore,

Keppel DC REIT achieved rental revisions of > 50% from a major contract renewal in 2Q 2025.

Portfolio WALE by rental income (weighted average lease expiry) extended by 0.3 year to 4.7 years.

Portfolio Occupancy fell to 95.8% as of 30 Jun 2025, from 96.5% as of 31 Mar 2025.

This was due to a single tenant vacating KDC SGP 1 in Jun 2025 upon lease expiry.

In 2H 2025, Keppel DC REIT will work on backfilling the returned space at SGP 1.

Weakness in Australia and China assets.

Occupancy rate of Gore Hill Data Centre in Sydney, Australia remains at 80%.

While bidding for some tenants, Keppel DC REIT faced stiff competition in the rental rates offered. In 2H 2025, KDC will review the process and pursue new biddings to fill up the space at Gore Hill Data Centre.

In China, Keppel DC REIT made some loss allowances for Guangdong DCs but commented that the performance of the assets will recover at a moderate pace.

Active portfolio management in 2H 2025 to drive value accretion.

There are no major contracts due for renewal in 2H. Keppel DC REIT aims to raise ownership in SGP 7 and SGP 8 to 100%. KDC maintained a positive stance towards expanding the portfolio.

McKinsey & Co forecasts that global demand for data centres could grow at CAGR of 20% from 2023 to 2030, fueled by AI-related workloads.

Keppel DC REIT is looking at acquiring assets in Japan, South Korea, and Europe, with a focus on hyperscale data centres.

As an ongoing basis, asset repositioning and raising power intensification for selected assets could also unlock value for the portfolio.

Lower finance costs.

Due to lower floating interest rates, finance costs declined by 5.3% year-on-year to S$24.5 million.

Cost of debt fell to 3.0% as at 30 Jun 2025, lower by 10 basis points from 31 Mar 2025. Keppel DC REIT also made some debt repayment to the higher-rate bank loans, lowering the aggregate leverage to 30.0% as at 30 Jun 2025, lower by 20 basis points from 31 Mar 2025.

Debt profile has improved, with 76% of the debt on fixed rate basis, compared with 68% as at 31 Mar 2025.

Balance sheet remains robust with significant undrawn loan facilities of ~S$570 million.

Annualised dividend yield of 4.4%

Based on 1H 2025 DPU of 5.133 cents, Keppel DC REIT offers an annualised distribution yield of 4.4%.

It currently trades at a price-to-book valuation of 1.49x.