On 25 July 2025, Keppel DC REIT (“KDC”) have announced their half year result for FY2025. KDC has shown a continued stronger financial performance this quarter, and the share price has seen a significant increase over the last few months. KDC has also been able to strengthen their financial position since the equity fund raising, with the completion of all 2025 refinancing during the quarter. There are no more debts due in the current financial year.
Do note that their tenant concentration continues to consolidate in their top 10 tenants, with the top tenant now representing 45.3% of their rental income as of June 2025, an increase from 40.8% in March 2025. They may become increasing reliant on the tenant for their operations, something investors should continue to consider and monitor over the next few quarters.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Half Yearly Results
Photo source: https://www.keppeldatacentres.com/locations/asia-pacific/singapore/dc-1/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | +5.1% | +4.2% |
| Rating | Favorable | Favorable |
For KDC, DPU disclosed are as follows:
- Second Quarter of FY2025: SGD0.02630 per unit
- First Quarter of FY2025: SGD0.02503 per unit
- Fourth Quarter of FY2024: SGD0.02401 per unit
DPU for the second quarter of FY2025 has increased by 5.1% to SGD0.02630 per unit from SGD0.02503 per unit for the previous quarter. Noted the increase was due to higher net property income from recent acquisitions and finance income the Australia Data Centre Note. The metric remains Favorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 95.8% | 96.5% |
| Rating | Favorable | Favorable |
Occupancy rate as of 30 June 2025 has further decreased to 95.8%, The metric remains Favorable as it is still healthy. Investors will need to monitor over the next few quarters.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 30.0% | 30.2% |
| Rating | Favorable | Favorable |
Gearing ratio as of 30 June 2025 has remained relatively unchanged at 30.0%. The metric remains Favorable.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 5.9x | 5.8x |
| Rating | Favorable | Favorable |
The interest coverage as of 30 June 2025 has remained relatively unchanged at 5.9 times. The metric remains Favorable as the interest coverage is higher than my preference of 3.0 times. The improvement noted in the last quarter was due to the increase in net property income and decrease in gearing ratio.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.3 years | 3.1 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt as of 30 June 2025 has lengthened to 3.3 years. KDC has 22.2% of their debt due for renewal by end of FY2026. This metric remains Favorable as there is sufficient time to refinance their debts as they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.47 | 1.33 |
| Rating | Unfavorable | Unfavorable |
The Price to Book (“P/B”) ratio has become more expensive at 1.47. This is computed using the closing share price of SGD2.32 on 25 July 2025 and the net asset value per unit of SGD1.58 as of 30 June 2025. The metric is Unfavorable as investors are paying a significant premium, although this is a REIT with a strong sponsor.
As of 25 July 2025, the Market Capitalization is approximately SGD5,235 million.
Website: Yahoo Finance: Keppel DC REIT (AJBU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 0.35% | SGD 0.008 |
| 2024 | 5.59% | SGD 0.130 |
| 2023 | 4.40% | SGD 0.102 |
| 2022 | 3.69% | SGD 0.086 |
| 2021 | 4.80% | SGD 0.111 |
| 2020 | 2.73% | SGD 0.063 |
Do note the table above is not yet updated for the upcoming distribution. With a dividend payout of SGD0.05133 per unit in the second half of FY2025, we can use this as a base to project an annualized dividend of SGD 0.10266 per unit.
With a closing share price of SGD2.32 as of 25 July 2025, this translates to a dividend yield of 4.43%. For my benchmark, a general reasonable yield would be around 4.75%. KDC’s dividend yield is below my benchmark and the dividend yield is Unfavorable.
Website: Reasonable Dividend Yield 2025Q3 – 4.75%
If using dividend yield of 4.75% as a benchmark, based on the dividend of SGD0.103 per unit there is potential for KDC to see its share price drop by another 6.8% to SGD2.16.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.32 | – |
| 4.75% | 2.16 | -6.8% |
| 5.75% | 1.79 | -23.0% |
Interest Rate Sensitivity
The Federal Reserve on 18 June 2025 have continued to keep interest rates unchanged at a range of 4.25% to 4.50%. The central bank’s latest outlook spells out a stagflation environment resulting from the import duties, with inflation heading higher even as overall growth trends lower.
Website: Federal Reserve leaves interest rates unchanged as it forecasts higher inflation
As KDC have debts that are exposed to floating rate, any change in interest rate will result in KDC experiencing changes to their cost of debt. Management has disclosed that a 50-bps change in interest rate would have a 0.8% impact to 1H 2025’s DPU on a pro forma basis. With a DPU of SGD0.05133 per unit in the first half of FY2025, the DPU impact is approximately as below.
| Change in Interest Rates | Impact on DPU (SG cents) | Change as % of FY2025 first half DPU |
|---|---|---|
| 50 bps | 0.041 | 0.8% |
| 100 bps | 0.082 | 1.6% |
| 150 bps | 0.123 | 2.4% |
| 200 bps | 0.164 | 3.2% |
Key things to note
Tenant profile
KDC have a high tenant concentration with the top 10 tenants contributing to 82.2% of their total gross rent and the top tenant accounting for 45.3% for the month of June 2025. This is risky as KDC is heavily reliant on their top tenants for income. The withdrawal of any tenant will have a significant impact on their DPU.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | +5.1% | Favorable |
| Occupancy | 95.8% | Favorable |
| Gearing Ratio | 30.0% | Favorable |
| Interest Coverage | 5.9x | Favorable |
| Debt Maturity Profile | 3.3 years | Favorable |
| Price to Book Ratio | 1.47 | Unfavorable |
| Overall | Favorable |
Overall, the metrics remain Favorable to invest in KDC. KDC has managed to maintain their strong financial position since the equity fund raising. Keep in mind that the risks of a high P/B ratio and tenant concentration remain, and investors will need to assess their risk appetites accordingly.
Background
Keppel DC REIT was listed on the Singapore Exchange on 12 December 2014 as the first pure-play data centre REIT in Asia.
Keppel DC REIT’s investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate and assets necessary to support the digital economy.
Keppel DC REIT’s investments comprise a mix of colocation, fully fitted and shell and core assets, as well as debt securities, thereby reinforcing the diversity and resiliency of its portfolio.
Keppel DC REIT is managed by Keppel DC REIT Management Pte. Ltd. (the Manager) and sponsored by Keppel, a global asset manager and operator with strong expertise in sustainability-related solutions spanning the areas of infrastructure, real estate and connectivity.
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Website: Keppel DC REIT (SGX: AJBU): 2025 First Quarter Business Update
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