Keppel DC REIT FY2025 Financial Results Analysis

Keppel DC REIT has released its financial results for the second half and full year ended 31 December 2025. The report highlights a year of strong growth, strategic portfolio optimization, and continued value creation for unitholders. This analysis summarizes the key financial metrics, operational performance, capital management, and outlook, providing critical insights for investors.

Key Financial Metrics and Performance Comparison

The strong growth in revenue and income was driven primarily by strategic acquisitions, contract renewals, rental escalations, and portfolio optimization. Notably, finance costs declined due to lower interest rates and loan repayments, further supporting distributable income and DPU growth.

Dividend Details

• 2H 2025 DPU: 5.248 cents
• Ex-distribution Date: 6 Feb 2026
• Record Date: 9 Feb 2026
• Payment Date: 19 Mar 2026

Portfolio and Capital Management

• Assets Under Management: \$6.3 billion (up from ~\$6.2b, includes new acquisitions)
• Aggregate Leverage: 35.3% (increased due to new debt-funded acquisitions)
• Average Cost of Debt: 2.8% (Q4 2025), 3.0% (FY 2025), improved from previous year
• Interest Coverage Ratio: 7.5x (up from 6.6x)
• Debt Headroom: ~\$531 million (well below regulatory limit)
• Green Financing: 25.6% of total debt

Debt maturity and currency are well-staggered, with a mix of fixed and floating rates providing flexibility in various interest rate environments.

Portfolio Updates and Corporate Actions

• Acquisitions: Tokyo Data Centre 3 (Japan), remaining interests in Keppel DC Singapore 3, 4, 7 & 8, and 10-year lease extension for Singapore 7 & 8.
• Divestments: Kelsterbach Data Centre (Germany), Basis Bay Data Centre (Malaysia), NetCo Bonds and Preference Shares.
• Fundraising: Raised \$404.5 million via preferential offering (168.2% subscribed), expanding the unitholder base.
• Portfolio reversion: ~45% uplift on renewed contracts, driven by robust demand and strategic management.
• Occupancy: 95.8% as at 31 Dec 2025.
• WALE: 6.7 years by lettable area, 4.9 years by rental income.

Historical Performance Trends

Keppel DC REIT has demonstrated consistent growth in distributable income and DPU over the years. The FY2025 results reflect continued momentum from prior periods, with significant uplifts in all key financial metrics. Portfolio expansion and optimization remain central to the strategy, with acquisitions contributing meaningfully to both top-line and bottom-line growth.

Macroeconomic Environment and Outlook

• Global GDP growth expected to slow to 2.6% in 2026, with easing financial conditions offset by trade and demand softness.
• US Federal Reserve remains cautious on rate cuts, which may impact financing costs going forward.
• Structural demand for data centres continues to be powered by cloud adoption and AI workloads, with supply constraints supporting rental growth and portfolio value.
• Keppel DC REIT is well-positioned to benefit from these trends, with a hyperscale-focused strategy and strong Asia Pacific presence.

Chairman’s Statement

Advancing a Hyperscale-focused Strategy. Positioning for Future Growth. Strategic Portfolio Optimisation. Creating Unitholder Value.

The tone of the Chairman’s statement is clearly positive, reflecting confidence in the REIT’s growth trajectory, operational resilience, and value creation initiatives.

Events Impacting the Business

• Completion of certain divestments expected in 1Q 2026.
• Sale of NetCo Bonds and Preference Shares subject to regulatory clearance.
• No material legal disputes, natural disasters, or policy changes reported.

ESG Commitments

• 50% reduction in Scope 1 and 2 emissions by 2035 from a 2025 baseline.
• Renewable energy to ≥50% of fully-fitted assets by 2030.
• Green certification for all colocation assets by 2030.
• Zero incidents of data breaches, fraud, or non-compliance.

Conclusion and Investor Recommendations

Overall Assessment: Keppel DC REIT’s FY2025 financial performance is strong, underpinned by substantial YoY and HoH growth in revenue, net property income, distributable income, and DPU. Portfolio acquisitions and strategic capital management have enhanced scale and resilience, while operational metrics such as occupancy and WALE remain robust. The outlook remains positive, driven by favorable industry fundamentals and disciplined management.

• If you are currently holding the stock: The strong financial performance, resilient outlook, and continued growth suggest that holding the stock is recommended. The REIT is well-positioned for future growth and offers an attractive yield, supported by stable cash flows and prudent capital management.
• If you are not currently holding the stock: Given the robust fundamentals, positive industry trends, and proven management execution, initiating a position could be considered, especially for income-focused investors seeking exposure to data centre infrastructure and digital economy growth.

Disclaimer: The above recommendations are based solely on the contents of the reviewed financial report. Investors should conduct their own due diligence and consider their individual financial circumstances and risk appetite before making any investment decisions.

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