NTT DC REIT 1H FY25/26 Financial Review: Solid Start and Prudent Growth
NTT DC REIT, a newly listed data center real estate investment trust, presented its maiden half-yearly results for FY25/26 (period ended 30 September 2025). The REIT, with a diversified global portfolio across the US, EMEA, and APAC, reported a set of results that exceeded its adjusted IPO forecasts. This article provides a structured analysis of the reported performance, key portfolio developments, and management priorities as disclosed in the official report.
Key Financial Metrics
- Revenue: US\$49.5 million (+1.8% vs. Adjusted IPO Forecast)
- Net Property Income (NPI): US\$22.6 million (+1.7%)
- Distributable Income: US\$17.4 million (+3.3%)
- Distribution per Unit (DPU): 1.69 US cents (+3.0%)
- Portfolio Occupancy: 95.1% (+0.8 percentage points vs. IPO)
- Aggregate Leverage: 32.5% (down from 35% at IPO)
- Interest Coverage Ratio: 4.1x
- Net Asset Value (NAV) per Unit: US\$0.97 (+2.1% vs. IPO)
Financial Performance Table
| Metric |
1H FY25/26
(Actual) |
Adjusted IPO Forecast |
Change vs. Forecast |
| Revenue (US\$ million) |
49.5 |
48.7 |
+1.8% |
| Net Property Income (US\$ million) |
22.6 |
22.2 |
+1.7% |
| Distributable Income (US\$ million) |
17.4 |
16.9 |
+3.3% |
| Distribution per Unit (US cents) |
1.69 |
1.64 |
+3.0% |
| Portfolio Occupancy |
95.1% |
94.3% |
+0.8ppt |
| Aggregate Leverage |
32.5% |
35.0% |
-2.5ppt |
| Net Asset Value per Unit (US\$) |
0.97 |
0.95 |
+2.1% |
Portfolio and Operational Highlights
- Asset Base: 6 data center assets across the US, Vienna, and Singapore, with a total design IT load of 90.7MW and a purchase consideration of US\$1.5 billion.
- Occupancy: Improved to 95.1%, with notable leasing activity in Sacramento and Ashburn, and robust renewals (41.9% of FY25/26 expiries renewed).
- Rent Reversion: Positive rental reversion of 5.1% (4.4% for non-hyperscale).
- WALE: Weighted average lease expiry stands at 4.4 years, supporting income stability.
- Tenant Profile: Diversified, with the top 10 customers (excluding NTT Group) accounting for 60.5% of base rent; strong presence of Fortune 100 tech names.
Balance Sheet and Capital Management
- Unencumbered Portfolio: All assets remain unencumbered, with entirely unsecured loans.
- Debt Profile: Aggregate leverage at 32.5%, with no debt maturities in the next three financial years and 70% of interest rates fixed or hedged.
- Interest Rate: Weighted average all-in interest rate is 3.9%.
- Debt/EBITDA Ratio: 5.9x, with a healthy 0.5x debt/equity ratio and substantial headroom to the regulatory limit.
Key Initiatives and Outlook
- Potential acquisition of a Tier-1 data center asset from the sponsor to reduce concentration risk and enhance portfolio quality.
- Enhanced profitability targeted through further rental reversion opportunities, especially in Singapore.
- Introduction of green power initiatives, with a biomass-based renewable energy deal for SG1 enabling 100% net-zero (Scope 2) by 2026.
Market Environment
- US (Northern California & Virginia): Strong demand, with significant upward pricing pressure due to power constraints and limited new supply.
- EMEA (Vienna): New capacity coming online, driven by enterprise and hyperscale demand; pricing expected to remain stable.
- APAC (Singapore): Very tight supply following moratorium; pricing remains among the highest globally, with premium rates supported by robust enterprise demand and connectivity.
Chairman’s Statement
“NTT DC REIT has delivered a strong inaugural performance, exceeding key financial metrics as set out in our adjusted IPO forecasts. Our diversified portfolio is well-positioned in high-growth data center markets, and we remain focused on driving further value through accretive acquisitions, proactive lease management, and leading ESG initiatives. We are committed to delivering sustainable returns to our Unitholders while supporting our tenants’ growth and sustainability goals.”
Tone: Positive. The statement emphasizes strong performance, strategic positioning, and a clear growth and ESG agenda.
Conclusion and Investment Recommendations
NTT DC REIT has demonstrated a resilient and positive inaugural half-year result, outperforming its IPO forecasts across all major metrics. The portfolio’s high occupancy, prudent capital structure, and positive rental reversions provide a robust foundation for future distributions. Management’s clear focus on portfolio growth, profitability, and sustainability further enhances its long-term prospects. The absence of near-term debt maturities and healthy interest coverage add to its defensive qualities.
- If you are currently holding NTT DC REIT: Continue to hold. The REIT’s fundamentals remain strong, and management’s proactive approach to growth and sustainability bodes well for future performance and distributions.
- If you are not currently holding NTT DC REIT: Consider accumulating on market weakness. The REIT offers exposure to a high-growth sector (data centers), with stable income, a strong balance sheet, and the potential for accretive acquisitions and ESG-led value creation.
Disclaimer: This analysis is based solely on the information disclosed in the official NTT DC REIT financial report for 1H FY25/26. It is not investment advice. Investors should conduct their own research and consider their individual risk tolerance before making any investment decisions.
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