Broker: CGS International
Date of Report: July 24, 2026
Excerpt from CGS International report.
Report Summary
- Stock: Keppel DC REIT (Ticker: KDCREIT SP)
- Call to Action: Add (reiterate)
- Target Price: S\$2.68 (up from S\$2.64)
- Current Price (as of report): S\$2.30
- Upside: 16.5%
Keppel DC REIT reported a strong 1H26, with distributable income up 18.5% year-on-year and DPU of 5.714 Scts (+11.3% yoy), exceeding expectations. Revenue was boosted by the full contribution from Tokyo DC 3, positive rental reversions in Singapore and Australia, and the acquisition of additional stakes in KDC SGP 3/4. This was partly offset by the Kelsterbach divestment and higher acquisition-related interest costs.
Portfolio reversion was approximately 10% in 1H26. Management expects further upside from new Gore Hill DC leases, which should drive reversions higher in 2H26, and a significant income uplift in FY27F as new leases commence. Keppel DC REIT maintains a strong balance sheet with aggregate leverage at 34.0%, offering S\$673m debt headroom before reaching 40% leverage. 87% of borrowings are fixed, reducing interest rate risk.
Key growth drivers include Gore Hill leasing, continued positive rental reversions, and asset enhancement initiatives (AEI) at SGP 8, targeting additional growth from 2H27F. Downside risks include potential weaker occupancy, slower leasing, and higher funding costs.
ESG: KDCREIT received a B- LSEG ESG score, with significant progress in reducing emissions intensity and energy usage. About 25% of borrowings are green debt, and the REIT is targeting green certification for all colocation assets by 2030.
Above is an excerpt from a report by CGS International. Clients of CGS International can access the full research report from the broker’s website.
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