Keppel DC Reit H2 DPU up 7.1% at S$0.05248 on the back of acquisitions, strong portfolio reversion

[SINGAPORE] Data centre-focused Keppel DC Reit on Friday (Jan 30) posted a 7.1 per cent increase in distribution per unit (DPU) to S$0.05248 for the second half ended Dec 31, 2025, from S$0.04902 in the corresponding period a year earlier.

The manager attributed the increase to accretive acquisitions in Tokyo and Singapore, as well as a higher portfolio reversion.

The H2 DPU will be paid on Mar 19, said the real estate investment trust’s (Reit) manager in a bourse filing.

Revenue for the period was S$230.1 million, up 50.3 per cent on the year from S$153.1 million. Net property income rose 57 per cent to S$200.4 million from S$127.6 million.

Distributable income increased 53.4 per cent year on year to S$140.9 million from S$91.9 million.

The manager said that growth was mainly driven by contributions from it acquisitions of Keppel DC Singapore 7 and 8 and Tokyo Data Centre 1 and 3. Higher contributions from contract renewals and escalations also contributed to stronger growth.

However, the increase was partially offset by the divestments of Intellicentre Campus in Australia and Kelsterbach Data Centre in Germany, as well as the absence of a one-off dispute settlement sum received in 2024.

Keppel DC Reit is continuing power intensification studies in an effort to increase power its older assets as part of a transformation effort. For now there is no asset that has “hit the jackpot yet,” said Loh Hwee Long, chief executive officer of Keppel DC Reit.

The manager is looking at other pathways to increase the value creation ability of the portfolio, such as the asset enhancement initiative for its data centre SGP 8.

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Loh said: “Through improving on operational efficiency, we are able to create additional sellable power capacity to be injected into the inventory that we can sell to our customers.”

On rental reversions dropping to about 2 per cent in Q4 2025, Loh said that it is down to the type of contracts up for renewal each quarter, and that will affect the magnitude of the reversions. There were no major contract renewals in Q4 2025.

For the full 2025 fiscal year, net property income grew 47.2 per cent to S$383.3 million from S$260.3 million in FY2024. Revenue was S$441.4 million, gaining 42.2 per cent from S$310.3 million the year before.

FY2025 distributable income rose 55.2 per cent to S$268.1 million from S$172.7 million.

DPU for FY2025 rose to a record high of S$0.10381, up 9.8 per cent from S$0.09451 a year earlier. This was even after accounting for an enlarged unitholding base, following an equity fund raising in Q3 of FY2025.

Based on Keppel DC Reit’s closing price of $2.25 per unit on Dec 31, distribution yield would be 4.61 per cent for FY 2025.

Portfolio reversion stood at around 45 per cent for the full year.

The Reit’s portfolio asset valuation also rose 25.6 per cent year on year to S$6.3 billion. This was on the back of its acquisition of Tokyo Data Centre 3 and stronger valuations in Singapore.

Lower floating rates also helped to bring down the Reit’s average cost of debt to 2.8 per cent of Q4 of FY2025, and 3 per cent for FY2025.

As at Dec 31, 2025, the Reit’s total borrowings stood at S$2.4 billion, with 71.2 per cent hedged through interest rate swaps. Its aggregate leverage was 35.3 per cent and interest coverage ratio stood at 7.5 times.

Keppel DC Reit’s sponsor Keppel secured 720 megawatt power bank in January for an artificial intelligence (AI) data centre in Melbourne. The manager noted that this is part of an active pivot to hyperscalers rather than a shift in strategy in Australia.

The data centre portfolio in China had lower valuations, falling from S$273.5 million to S$229.3 million, which Loh attributed to a change in valuer. The landscape has shifted in the Chinese market compared with a year ago and Loh thinks the worse it probably over.

The AI focus in China will drive Keppel DC Reit’s recovery, with the hope that demand will continue to be more widespread across the market. With the recent relaxation of the Chinese government in letting companies buy Nvidia H200 chips, it removes a chokepoint for the Reit’s customers.

Loh said: “On that basis, hopefully that will also be a catalyst towards more widespread demand growth this year for the Chinese DC market.”

Units of Keppel DC Reit closed 0.4 per cent or S$0.01 higher at S$2.24 on Thursday.