On 16 April 2026, Keppel DC REIT (“KDC”) released their first quarter business update for FY2026. KDC managed to deliver a strong growth with continued improvement in DPU on a quarter-on-quarter basis. This was mainly supported by their portfolio with their recent acquisitions in Tokyo and Singapore. There were no other significant changes noted to their operational fundamentals and KDC’s financial position remained relatively stable.
Disclaimer: Not financial advice. This content is provided for general informational purposes only and does not constitute financial, investment, legal, or tax advice. The information presented is based on publicly available data and estimates that may be subject to change without notice. It does not take into account your individual financial situation, investment objectives, risk tolerance, or specific needs.
Photo source: https://www.keppeldatacentres.com/locations/asia-pacific/singapore/dc-1/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | +4.5% | +6.9% |
| Rating | Favourable | Favourable |
The DPU metric will be assessed on a quarterly basis given the information available from the business updates.
For KDC, DPU disclosed are as follows:
- 1st Quarter of FY2026: SGD0.02833 per unit
- 4th Quarter of FY2025: SGD0.02711 per unit
- 3rd Quarter of FY2025: SGD0.02537 per unit
- 2nd Quarter of FY2025: SGD0.02630 per unit
DPU for the first quarter of FY2026 has increased by 4.5% to SGD0.02833 per unit. The increase in DPU was mainly due to the acquisitions and a stronger portfolio performance. The metric remains Favourable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 95.6% | 95.8% |
| Rating | Favourable | Favourable |
The occupancy metric will be assessed on a quarterly basis given the information available from the business updates.
Occupancy rate as of 31 March 2026 has remained relatively unchanged at 95.6%. The metric remains Favourable.
Gearing Ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 35.1% | 35.3% |
| Rating | Favourable | Favourable |
The gearing ratio metric will be assessed on a quarterly basis given the information available from the business updates.
Gearing ratio as of 31 March 2026 has remained relatively unchanged at 35.1%. The metric remains Favourable as there is still a buffer from the regulatory limit.
Interest Coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 7.2x | 7.5x |
| Rating | Favourable | Favourable |
The interest coverage metric will be assessed on a quarterly basis given the information available from the business updates.
The interest coverage as of 31 March 2026 has decreased slightly to 7.2 times. This was due to higher finance costs with the increased borrowings. The metric remains Favourable as the interest coverage is higher than my preference of 3.0 times.
Debt Maturity Profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.3 years | 3.3 years |
| Rating | Favourable | Favourable |
The debt maturity profile metric will be assessed on a quarterly basis given the information available from the business updates.
Weighted average term to maturity of their debt as of 31 March 2026 has remained unchanged at 3.3 years. This metric remains Favourable as there is still sufficient time to refinance their debts as they fall due. KDC has 24.9% of their debt due for renewal by end of FY2027.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.34 | 1.35 |
| Rating | Unfavourable | Unfavourable |
The price to book ratio metric will be assessed on a quarterly basis. Although the information on net asset value is only available from the business updates on a half yearly basis, the most recent share price is available on a daily basis.
Based on the announcement on 16 April 2026, net asset value (“NAV”) was not included in the business update for the first quarter of FY2026.
The Price to Book (“P/B”) ratio has remained relatively unchanged at 1.34. This is computed using the closing share price of SGD2.29 per unit on 5 June 2026 and the net asset value of SGD1.71 per unit as of 31 December 2025. The metric is Unfavourable as investors are paying a significant premium, although this is a REIT with a strong sponsor.
As of 5 June 2026, the Market Capitalization is approximately SGD5,602 million.
Website: Yahoo Finance: Keppel DC REIT (AJBU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2026 | 2.29% | SGD 0.052 |
| 2025 | 2.60% | SGD 0.060 |
| 2024 | 5.66% | SGD 0.130 |
| 2023 | 4.46% | SGD 0.102 |
| 2022 | 3.74% | SGD 0.086 |
With no new distributions during the quarter, the distributions in the first half of the calendar year 2026 landed at SGD0.052 per unit. This projects an annualized yield of SGD0.104 per unit. This performance is in line with the calendar year 2025 levels of SGD0.103 per unit when including the advance distribution made in the previous calendar year.
With a closing share price of SGD2.29 per unit as of 5 June 2026, this translates to a dividend yield of 4.54%. For my benchmark, a general reasonable yield would be around 4.75%. KDC’s dividend yield is below my benchmark and is Unfavourable.
Website: Reasonable Dividend Yield 2026Q2 – 4.75%
If using dividend yield of 4.75% as a benchmark, based on the expected dividend of SGD0.104 per unit there is potential for KDC to see its share price drop by another 4.4% to SGD2.19 per unit.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.29 | – |
| 4.75% | 2.19 | -4.4% |
| 5.75% | 1.81 | -21.0% |
Interest Rate Sensitivity
An unusually divided Federal Reserve on 29 April 2026, Wednesday held its key interest rate steady as policymakers grappled with the policy impact of persistent inflation and awaited a looming leadership transition at the central bank.
In what may have been Chair Jerome Powell’s final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.50% to 3.75%. Markets had been pricing in a 100% chance of no change.
However, the meeting saw a dramatic turn amid a groundswell of officials who opposed messaging that further rate cuts could be ahead. Amid expectations for a routine vote to hold the benchmark funds rate steady, the FOMC instead was split along 8-4 lines, with officials expressing different reasons for their vote.
Website: Fed holds rates steady but with highest level of dissent since 1992
KDC has disclosed that a 25-bps change in interest rate would have a 0.3% impact to 1Q 2026’s DPU on a pro forma basis. With a DPU of 2.833 Singapore cents per unit in the first quarter of FY2026, the DPU impact is approximately as below.
| Change in Interest Rates | Impact on DPU (SG cents) | Change as % of quarterly DPU |
|---|---|---|
| 25 bps | 0.008 | 0.3% |
| 50 bps | 0.017 | 0.6% |
Key Things to Note
Tenant Profile
KDC have a high tenant concentration with the top 10 tenants contributing to 83.5% of their total gross rent and the top tenant accounting for 42.8% for the month of March 2026. 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 | +4.5% | Favourable |
| Occupancy | 95.6% | Favourable |
| Gearing Ratio | 35.1% | Favourable |
| Interest Coverage | 7.2x | Favourable |
| Debt Maturity Profile | 3.3 years | Favourable |
| Price to Book Ratio | 1.34 | Unfavourable |
| Overall | Favourable |
Overall, KDC metrics remains Favourable. For a final look at the overarching strategy, I recommend a quick reread of the summary and overall outlook provided in the opening paragraphs.
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): FY2025 Full Year Result
