Company Coverage
Keppel DC REIT (PREIT MK) : 1H26: Outlook Brightens In 2028
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$2.30
S$2.95
+28.3%
S$2.99
Analyst
Highlights
- Rent reversion should improve substantially in 2028 due to renewal for several large colocation leases. Potential acquisitions from sponsor pipeline, such as SGP9 in Singapore and a data centre in Western Tokyo, are also likely to materialise in 2028 after these data centres are stabilised.
- Revenue contribution from Gore Hill Data Centre is expected to more than double when new tenants move in by end-26, helping KDCREIT to clock positive rental reversion in the low teens in 3Q26.
- Maintain BUY on resiliency of the data centre market in Singapore (62.8% of AUM) and support from sponsor Keppel. Target price: S$2.95.
Analysis
- Keppel DC REIT (KDCREIT) reported a DPU of 5.714 S cents for 1H26 (+11% yoy), which is marginally above our expectation.
- NPI grew 15% yoy in 1H26 due to: a) full six-month contribution from the newly acquired Tokyo Data Centre 3 (completion: 19 Nov 25), and b) contract renewals and rental escalation. This was partially offset by the divestment Kelsterbach Data Centre in Germany (completion: 24 Mar 25). NPI margin expanded slightly by 0.4ppt yoy to 86.9% in 1H26. Growth in distributable income and DPU was aided by the acquisition of remaining interests in SGP3 (10%) and SGP4 (1%).
Clocked healthy positive reversion. KDCREIT achieved positive rental reversion of 10% during 1H26 (1Q26: 51%, 2Q26: 5%). It renewed leases in Singapore and Australia in 2Q26, which lengthened portfolio WALE weighted by lettable area by 0.2 years to 6.7 years. Portfolio occupancy eased 3.1ppt qoq to 92.5% as of Jun 26 due to contract expiry at Cardiff Data Centre (a small asset accounting for 0.1% of portfolio valuation). Based on power capacity, 95% of portfolio capacity remains contracted.
Highlights
- Rent reversion should improve substantially in 2028 due to renewal for several large colocation leases. Potential acquisitions from sponsor pipeline, such as SGP9 in Singapore and a data centre in Western Tokyo, are also likely to materialise in 2028 after these data centres are stabilised.
- Revenue contribution from Gore Hill Data Centre is expected to more than double when new tenants move in by end-26, helping KDCREIT to clock positive rental reversion in the low teens in 3Q26.
- Maintain BUY on resiliency of the data centre market in Singapore (62.8% of AUM) and support from sponsor Keppel. Target price: S$2.95.
Analysis
- Keppel DC REIT (KDCREIT) reported a DPU of 5.714 S cents for 1H26 (+11% yoy), which is marginally above our expectation.
- NPI grew 15% yoy in 1H26 due to: a) full six-month contribution from the newly acquired Tokyo Data Centre 3 (completion: 19 Nov 25), and b) contract renewals and rental escalation. This was partially offset by the divestment Kelsterbach Data Centre in Germany (completion: 24 Mar 25). NPI margin expanded slightly by 0.4ppt yoy to 86.9% in 1H26. Growth in distributable income and DPU was aided by the acquisition of remaining interests in SGP3 (10%) and SGP4 (1%).
Clocked healthy positive reversion. KDCREIT achieved positive rental reversion of 10% during 1H26 (1Q26: 51%, 2Q26: 5%). It renewed leases in Singapore and Australia in 2Q26, which lengthened portfolio WALE weighted by lettable area by 0.2 years to 6.7 years. Portfolio occupancy eased 3.1ppt qoq to 92.5% as of Jun 26 due to contract expiry at Cardiff Data Centre (a small asset accounting for 0.1% of portfolio valuation). Based on power capacity, 95% of portfolio capacity remains contracted.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$2.30
S$2.95
+28.3%
S$2.99
Analyst
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