On 23 July 2026, Keppel DC REIT (“KDC”) released their half year result for FY2026. The most prominent shift during this period was the reduction in portfolio occupancy, which dropped to 92.5% by the end of June 2026. This decline was caused by a contract expiry and the resulting vacancy at the Cardiff Data Centre, which may see DPU impact over the next few quarters. Excluding this, KDC’s underlying financial performance remained robust, having successfully delivered period-over-period DPU accretion while maintaining a resilient balance sheet supported by prudent capital management.
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.
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 | +1.7% | +4.5% |
| 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:
- 2nd Quarter of FY2026: SGD0.02881 per unit
- 1st Quarter of FY2026: SGD0.02833 per unit
- 4th Quarter of FY2025: SGD0.02711 per unit
- 3rd Quarter of FY2025: SGD0.02537 per unit
DPU for the second quarter of FY2026 has increased by 1.7% to SGD0.02881 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 | 92.5% | 95.6% |
| Rating | Neutral | Favourable |
The occupancy metric will be assessed on a quarterly basis given the information available from the business updates.
Occupancy rate as of 30 June 2026 has decreased significantly to 92.5%. This decrease was driven by a single property, the Cardiff Data Centre, which experienced a major contract expiration resulting in a significant vacancy. The metric shifted towards Neutral.
Gearing Ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 34.0% | 35.1% |
| 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 30 June 2026 has decreased to 34.0%. The metric remains Favourable as there is still a buffer from the regulatory limit.
Interest Coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 6.9x | 7.2x |
| 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 30 June 2026 has decreased to 6.9 times. This was due to higher finance costs with the increase in cost of debt, though noted that the total borrowings decreased. 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 | 3.1 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 30 June 2026 has decreased to 3.1 years. This metric remains Favourable as there is still sufficient time to refinance their debts as they fall due. KDC has 22.9% of their debt due for renewal by end of FY2027.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.27 | 1.34 |
| 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.
The Price to Book (“P/B”) ratio has become cheaper at 1.27. This is computed using the closing share price of SGD2.20 per unit on 14 August 2026 and the net asset value of SGD1.73 per unit as of 30 June 2026. The metric is Unfavourable as investors are paying a significant premium, although this is a REIT with a strong sponsor.
As of 14 August 2026, the Market Capitalization is approximately SGD5,385 million.
Website: Yahoo Finance: Keppel DC REIT (AJBU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2026 | 4.98% | SGD 0.110 |
| 2025 | 2.71% | SGD 0.060 |
| 2024 | 5.89% | SGD 0.130 |
| 2023 | 4.64% | SGD 0.102 |
| 2022 | 3.89% | SGD 0.086 |
Total distributions for the calendar year 2026 landed at SGD0.110 per unit. With a closing share price of SGD2.20 per unit as of 14 August 2026, this translates to a dividend yield of 4.98%. For my benchmark, a general reasonable yield would be around 4.50%. KDC’s dividend yield is above my benchmark and is Favourable.
Website: Reasonable Dividend Yield 2026Q3 – 4.50%
If using dividend yield of 5.50% as a benchmark, based on the expected dividend of SGD0.110 per unit there is potential for KDC to see its share price drop by 9.1% to SGD2.00 per unit.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.20 | – |
| 5.50% | 2.00 | -9.1% |
| 6.50% | 1.69 | -23.1% |
Interest Rate Sensitivity
Federal Reserve officials held interest rates steady on 29 July 2026, Wednesday over the objections of three bank presidents who wanted an increase, underscoring how pressure is building inside the central bank to act on inflation that has run above its target for five years.
The Fed held its benchmark rate steady, in a range of 3.50% to 3.75%, in a 9-3 vote. The rate-setting panel issued the same policy statement as it did in June, when it also held rates steady. The decision left Chairman Kevin Warsh’s vow to end the run of above-target inflation to rest for a second straight meeting on words rather than action.
Website: Fed Holds Rates Steady but Three Officials Vote for Increase
KDC has disclosed that a 25-bps change in interest rate would have a 0.3% impact to 1H 2026’s DPU on a pro forma basis. With a DPU of 5.714 Singapore cents per unit in the first half of FY2026, the DPU impact is approximately as below.
| Change in Interest Rates | Impact on DPU (SG cents) | Change as % of DPU |
|---|---|---|
| 25 bps | 0.017 | 0.3% |
| 50 bps | 0.034 | 0.6% |
Key Things to Note
Tenant Profile
KDC has a high tenant concentration with the top 10 tenants contributing to 84.3% of their total gross rent and the top tenant accounting for 43.5% for the month of June 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 | +1.7% | Favourable |
| Occupancy | 92.5% | Neutral |
| Gearing Ratio | 34.0% | Favourable |
| Interest Coverage | 6.9x | Favourable |
| Debt Maturity Profile | 3.1 years | Favourable |
| Price to Book Ratio | 1.27 | 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): FY2026 First Quarter Business Update
