Keppel DC REIT's 1H FY25 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI posted strong YoY growth, driven by contributions from:

• Acquisitions of Keppel DC Singapore 7 & 8 and Tokyo Data Centre 1
• Higher variable rents from contract renewals and rental escalations

Finance income also rose, mainly from the Australia Data Centre Note, while finance costs declined due to lower interest rates and loan repayments. These factors led to a significant increase in distributable income. Albeit, DPU rose to a lesser extent (+12.8%) due to a larger unitholder base.

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Rental Reversion

Keppel DC REIT recorded a strong portfolio rental reversion of ~51% for 1H 2025, largely due to major contract renewals.

Acquisition

KDC targets to acquire the remaining stake in Keppel DC Singapore 7 & 8 by 2H 2025. The trust currently owns 99.49% of both assets

Divestment

The divestment of Basis Bay Data Centre in Malaysia is expected to complete in 3Q 2025.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Less Favorable
• REIT Manager's Shareholding: Favorable
• Directors of REIT Manager's Shareholding: Less Favorable

Lease Profile

• Committed Occupancy: Moderate
• Highest Annual Lease Expiry in 4 Years: Less Favorable
• WALE: Moderate
• Weighted Average Land Lease Expiry: Less Favorable

Debt Profile

• Adjusted Interest Coverage Ratio: Favorable
• Cost of Debt: Favorable
• Gearing Ratio: Favorable
• Fixed Rate Debt Proportion: Moderate
• Unsecured Debt Proportion: Favorable
• Highest Annual Debt Maturity in 4 Years: Moderate
• WADM: Moderate

Diversification Profile

• Top Geographical Weightage: Moderate
• Top Property Weightage: Favorable
• Top 5 Properties' Weightage: Moderate
• Top Tenant Weightage: Moderate
• Top 10 Tenants' Weightage: Less Favorable

Key Financial Metrics

• Property Yield: Favorable
• Manager's Fees over Operating Distributable Income: Moderate
• Operating Distributable Income on Capital: Favorable
• Operating Distributable Income Margin: Favorable
• Operating Distribution Proportion: Favorable

DPU Breakdown

• TTM Distribution Breakdown:
• 86.6% from Operation
• 3.2% from Management Fees Paid in Units
• 3% from Income Support
• 7.2% being Retained

Trends (Up to 10 Years)

• Uptrend: DPU from Operations, NAV per Unit, Committed Occupancy
• Slight Uptrend: None
• Flat: Top 10 Tenants' Weightage, Operating Distributable Income Margin, Operating Distribution Proportion
• Slight Downtrend: None
• Downtrend: Adjusted Interest Coverage Ratio, Top 5 Properties' Weightage, Property Yield, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital

Price Range & Relative Valuation Metrics

• Dividend Yield: Average for 1y, 5y & 10y; Below -1SD for 3y
• P/NAV: Average for 1y, 3y, 5y & 10y

Author's Opinion

Compared to the previous half-year, overall performance has improved, underpinned by recent acquisitions and strong portfolio reversion. On the debt front, all refinancing for 2025 has been completed, no refinancing is due for the rest of the year.

For more information, check out:

S-REITs Dashboard - Detailed information on individual Singapore REIT

S-REITs Data - Overview and detail of Singapore REITs

S-REIT Comparison - Comparison among Singapore REITs

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.