On 24 October 2025, Keppel DC REIT (“KDC”) released their third quarter business update for FY2025. There were no major changes to its financial position, though DPU declined as a result of an enlarged unitholder base. The funds raised from the recent preferential offering will only be deployed in the upcoming quarter, as indicated by the acquisition of a data centre in Inzai City, Japan, for SGD229 million.
KDC continues to draw strong investor interest, supported by sustained global demand for data usage, cloud services, AI, and digital infrastructure. With the REIT trading at a substantial premium to its book value, equity fundraising remains a strategic way to pursue expansion. The benefits to existing unitholders, however, will depend on management’s ongoing ability to execute effectively.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only. It does not take into account your individual needs, investment objectives and specific financial circumstances.
Photo source: https://www.keppeldatacentres.com/locations/asia-pacific/singapore/dc-1/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -3.5% | +5.1% |
| Rating | Unfavorable | Favorable |
For KDC, DPU disclosed are as follows:
- Third Quarter of FY2025: SGD0.02537 per unit
- 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 third quarter of FY2025 has decreased by 3.5% to SGD0.02537 per unit from SGD0.02630 per unit for the previous quarter. The DPU took into account the expanded unitholding base for preferential offering units that were listed on 22 October 2025. The metric shifted towards Unfavorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 95.8% | 95.8% |
| Rating | Favorable | Favorable |
Occupancy rate as of 30 September 2025 remain unchanged at 95.8%. The metric remains Favorable.
Gearing Ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 29.8% | 30.0% |
| Rating | Favorable | Favorable |
Gearing ratio as of 30 September 2025 remained relatively unchanged at 29.8%. The metric remains Favorable.
Interest Coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 6.6x | 5.9x |
| Rating | Favorable | Favorable |
The interest coverage as of 30 September 2025 has increased to 6.6 times. The metric remains Favorable as the interest coverage is higher than my preference of 3.0 times.
Debt Maturity Profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 2.8 years | 3.3 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt as of 30 September 2025 has shortened significantly to 2.8 years. This metric remains Favorable as there is still sufficient time to refinance their debts as they fall due. KDC has 22.6% of their debt due for renewal by end of FY2026.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.46 | 1.47 |
| Rating | Unfavorable | Unfavorable |
Based on the announcement on 24 October 2025, net asset value (“NAV”) was not included in the business update for the third quarter of FY2025.
The Price to Book (“P/B”) ratio has become slightly cheaper at 1.46. This is computed using the closing share price of SGD2.31 per unit on 28 November 2025 and the net asset value of SGD1.58 per unit 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 28 November 2025, the Market Capitalization is approximately SGD5,632 million.
Website: Yahoo Finance: Keppel DC REIT (AJBU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.58% | SGD 0.060 |
| 2024 | 5.61% | SGD 0.130 |
| 2023 | 4.42% | SGD 0.102 |
| 2022 | 3.70% | SGD 0.086 |
| 2021 | 4.82% | SGD 0.111 |
| 2020 | 2.74% | SGD 0.063 |
Do note that there was an advance distribution paid in the calendar year 2024. 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 SGD2.31 per unit as of 28 November 2025, this translates to a dividend yield of 4.44%. For my benchmark, a general reasonable yield would be around 4.25%. KDC’s dividend yield is above my benchmark and the dividend yield is Favorable.
Website: Reasonable Dividend Yield 2025Q4 – 4.25%
If using dividend yield of 5.25% 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 15.3% to SGD1.96 per unit.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.31 | – |
| 5.25% | 1.96 | -15.3% |
| 6.25% | 1.64 | -28.9% |
Interest Rate Sensitivity
The Federal Reserve on 29 October 2025 approved its second straight interest rate cut, though Chair Jerome Powell rattled markets when he threw doubt on whether another reduction is coming in December. This lowers the benchmark overnight borrowing rate to a range of 3.75% to 4.00%.
Website: Fed cuts rates again, but Powell raises doubts about easing at next meeting
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 3Q 2025’s DPU on a pro forma basis. With a DPU of SGD0.02537 per unit in the third quarter of FY2025, the DPU impact is approximately as below.
| Change in Interest Rates | Impact on DPU (SG cents) | Change as % of FY2025 third quarter DPU |
|---|---|---|
| 50 bps | 0.020 | 0.8% |
| 100 bps | 0.041 | 1.6% |
| 150 bps | 0.061 | 2.4% |
| 200 bps | 0.081 | 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 45.1% for the month of September 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 | -3.5% | Unfavorable |
| Occupancy | 95.8% | Favorable |
| Gearing Ratio | 29.8% | Favorable |
| Interest Coverage | 6.6x | Favorable |
| Debt Maturity Profile | 2.8 years | Favorable |
| Price to Book Ratio | 1.46 | Unfavorable |
| Overall | Neutral |
Overall, the metrics shifted towards Neutral to invest in KDC. This was mainly due to the decrease in DPU, which was a result from the enlarged unitholding base. This may improve in the next quarter with the utilization of the proceeds from the preferential offering.
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.
Previous Post
Website: Keppel DC REIT (SGX: AJBU): 2025 Half Year Result
One thought on “Keppel DC REIT (SGX: AJBU): 2025 Third Quarter Business Update”