Keppel DC REIT FY2025 Financial Results Analysis

Keppel DC REIT delivered its Second Half and Full Year 2025 financial results on 30 January 2026, highlighting a year of robust growth, strategic portfolio optimization, and strong capital management. As a major constituent in multiple indices and a recipient of numerous awards, Keppel DC REIT continues to position itself as a leading player in the data centre REIT sector. This analysis covers the key financial metrics, performance trends, portfolio updates, capital movements, and the outlook for investors.

Key Financial Metrics and Performance Comparison

Dividend Details

• 2H 2025 Distribution Per Unit (DPU): 5.248 cents
• FY 2025 DPU: 10.381 cents (up 9.8% YoY)
• Ex-distribution Date: 6 Feb 2026
• Record Date: 9 Feb 2026
• Payment Date: 19 Mar 2026

Historical Performance and Key Trends

• Revenue and Income Growth: FY2025 saw Gross Revenue rise by 42.2% YoY, Net Property Income by 47.2%, and Distributable Income by 55.2%, driven primarily by acquisitions (notably in Singapore and Japan), rental escalations, and portfolio optimization initiatives.
• Portfolio Value: The portfolio value increased 25.6% to S\$6.07 billion, with 3.7% growth on a same-store basis, reflecting resilience in key APAC markets despite some asset-specific softness in other regions.
• Portfolio Occupancy: Maintained a high portfolio occupancy of 95.8% and a healthy WALE (Weighted Average Lease Expiry) of 6.7 years.
• Portfolio Reversion: Achieved a strong portfolio reversion of ~45% for FY2025, indicating significant positive rental reversions on renewed leases.

Capital Management & Fundraising

• Aggregate Leverage: Increased to 35.3% (from previous quarters), largely due to acquisitions and lease extensions. Management notes a substantial debt headroom of ~\$531 million (based on a 40% internal threshold) and ~\$1,996 million under the 50% MAS regulatory limit.
• Cost of Debt: Fell to an average of 2.8% in 4Q 2025 (3.0% for FY2025), aided by lower interest rates and currency diversification. Interest Coverage Ratio improved to 7.5x.
• Fundraising: Raised \$404.5 million via a preferential offering, which was significantly oversubscribed (168.2%). This resulted in an expanded unitholder base and some DPU dilution, but overall DPU was still up YoY.

Portfolio Updates and Asset Movements

• Acquisitions: ~\$1.1 billion in acquisitions, including Tokyo Data Centre 3 and remaining interests in several Singapore data centres. There was also a 10-year land tenure lease extension for Keppel DC Singapore 7 & 8.
• Divestments: ~\$0.2 billion in divestments, including Kelsterbach Data Centre (Germany) and Basis Bay Data Centre (Malaysia). Some debt securities and preference shares were also sold.

Macroeconomic and Business Outlook

The manager expects a robust structural demand for data centres, powered by cloud adoption and artificial intelligence (AI) workload requirements. While the global macroeconomic environment is expected to slow (with GDP growth forecasted at 2.6% in 2026), supply constraints (land, power grid) and sustained demand from hyperscale and enterprise clients are likely to support rental growth and portfolio resilience.

• Key Risks: Slowing global growth, currency fluctuations, and potential asset-specific weaknesses in certain regions.
• Growth Drivers: Strong demand for digital infrastructure, successful capital recycling, and strategic scaling in core APAC markets.

Corporate Actions & Other Events

• Index Inclusion: Added to the Straits Times Index, reflecting increased market recognition and investor confidence.
• Awards: Multiple wins for corporate governance, investor relations, and sustainability, underlining strong management quality.
• Contract Expiries: Well-staggered contract expiry profile, minimizing near-term rollover risk.

Conclusion & Investment Recommendations

Overall Assessment: Keppel DC REIT’s FY2025 performance is strong, with substantial YoY growth across all key financial metrics, disciplined capital management, and continued portfolio optimization. The distribution per unit (DPU) is up nearly 10% YoY, and the REIT is well-positioned to capitalize on secular growth trends in data infrastructure, despite some macroeconomic uncertainties.

Recommendations

• If you are currently holding the stock: Consider holding your position. The REIT demonstrates strong fundamentals, resilient cash flows, and proactive capital management. The expanded portfolio and positive rental reversions support a stable income outlook.
• If you are not currently holding the stock: Consider initiating a position, especially if seeking exposure to the data centre sector and its secular growth drivers. The REIT’s defensive characteristics, strong balance sheet, and index inclusion make it an attractive option for yield-focused and growth-oriented investors alike.

Disclaimer: This analysis is based strictly on information contained within the company’s FY2025 financial report. It does not constitute personal investment advice. Investors should consider their own risk tolerance and investment objectives before making any decision.

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