Keppel DC REIT Surges in 3Q 2025: Robust Portfolio Growth, Strategic Optimisations, and AI-Driven Outlook Signal Promising Upside

Keppel DC REIT has delivered a striking operational update for the third quarter of 2025, showcasing powerful growth in distributable income, aggressive portfolio optimisation, and a forward-looking strategy that positions the trust as a leading beneficiary of Asia Pacific’s accelerating digital infrastructure boom.

Key Financial and Operational Highlights

• Distributable Income soared 55.5% year-on-year to S\$195.3 million for the first nine months of 2025.
• Distribution Per Unit (DPU) rose 8.8% to 7.670 cents, with an adjusted DPU of 7.872 cents accounting for the expanded unitholder base after a heavily oversubscribed Preferential Offering.
• Gross Revenue climbed 37.7% to S\$322.4 million, powered by strategic acquisitions and contract escalations.
• Portfolio Occupancy remains exceptionally high at 95.8%, with a healthy weighted average lease expiry (WALE) of 6.7 years.
• Aggregate Leverage is a comfortable 29.8%, following proactive loan repayments and robust capital management.
• Assets Under Management (AUM) now stand at approximately S\$5.7 billion, spanning 25 data centres across 10 countries, with 83.1% exposure in Asia Pacific.

Potential Price-Sensitive Developments for Shareholders

• Strategic Portfolio Optimisation:
  • Completion of the acquisition of Keppel DC Singapore 7 & 8, with tax transparency application and land lease extension on track.
  • Proposed divestment of NetCo Bonds & Preference Shares to sharpen focus on core data centre assets, pending sale completion.
  • Acquisition of Tokyo Data Centre 3, a hyperscale centre with built-in rent escalation, expected to close by year-end 2025—set to further strengthen the REIT’s APAC footprint.
• Successful Capital Raising:
  • The Preferential Offering raised S\$404.5 million and was ~168% subscribed, reflecting strong investor confidence and providing resources for future acquisitions and debt optimisation.
• Active Debt Management:
  • Average cost of debt has improved to 2.9%, with the majority of borrowings on fixed rates and a well-staggered debt maturity profile.
  • Interest coverage ratio has strengthened to 6.6 times, providing substantial headroom for rising rates or market shocks.
• ESG Leadership and Green Financing:
  • Keppel DC REIT announced its inaugural Green Financing Framework in February 2025, underpinning its commitment to sustainability and access to green capital markets.
  • Green Star designation from GRESB for the fourth consecutive year, with six assets in Singapore and Dublin maintaining green certifications.
  • Ambitious targets: 50% reduction in Scope 1 & 2 emissions by 2030 (from 2019), renewable energy in ≥50% of colocation assets by 2030, and green certifications for all colocation assets by 2030.
• AI and Digital Infrastructure Growth Tailwinds:
  • AI workloads in APAC nearly doubled in the past year, with global data centre demand projected to surge to 100 GW by 2027.
  • Keppel DC REIT’s hyperscale-focused acquisitions and strong APAC presence make it a prime beneficiary of the region’s AI infrastructure expansion, especially with major projects like “OpenAI for Countries” driving demand in South Korea, Japan, and India.

Portfolio and Client Diversification

• Diversified Client Base: 75 unique clients, with the top 10 contributing 85%+ of rental income. Major clients include Fortune Global 500 hyperscalers, government-linked telecoms providers, and multinational colocation providers.
• Contract Mix: 77.8% of rental income is from colocation contracts (WALE 3.4 years), with the remainder from fully-fitted and shell/core arrangements, providing a balance of stability and growth.

Forward-Looking Outlook

• Macro Tailwinds: Global growth forecast of 2.5% for 2026-2027, easing financial conditions, and expected US Fed rate cuts support a favourable environment for further expansion and refinancing.
• Ongoing Optimisation: Portfolio reversion rates remain positive, with no major contract renewals in 3Q 2025 and asset enhancement initiatives underway to unlock further value, especially at Keppel DC Singapore 8.

ESG and Community Commitments

• Community Impact: Over €40,000 raised for neurodivergent students in Ireland, and >1,200 community hours dedicated in 9M 2025.
• Governance: Zero incidents of fraud, corruption, or data breaches; ~30% female board representation; average 20 training hours per employee targeted for 2025.

Investor Takeaways and Price Sensitivity

Keppel DC REIT’s 3Q 2025 update signals a period of exceptional growth and strategic transformation. Key price-sensitive factors for shareholders include the completion of major acquisitions, successful capital raising and debt optimisation, divestment of non-core assets, and exposure to AI-driven demand in APAC. The REIT’s strong financials, high occupancy, and proactive ESG leadership further underpin its attractiveness as a core digital infrastructure play.

Investors should closely monitor:

• Progress and completion of Tokyo Data Centre 3 acquisition.
• Execution of NetCo Bonds & Preference Shares divestment.
• Continued success in capital management and cost of debt reduction.
• ESG initiatives and green financing uptake, which may unlock additional value and market re-rating.
• Developments in AI and cloud infrastructure demand across APAC, which could accelerate organic and inorganic growth for Keppel DC REIT.

Disclaimer:

This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. All forward-looking statements are subject to risks and uncertainties, including but not limited to macroeconomic conditions, regulatory changes, and operational risks. Investors are advised to conduct their own due diligence and seek professional advice before making any investment decisions.

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