Company Coverage
Keppel DC REIT (KDCREIT SP): 3Q26: Completes Acquisition Ahead Of AI Funding Squeeze
BUY (Maintained)
Current price:
Target price:
Upside:
S$2.13
S$2.83
40.4%
Analyst
Highlights
- KDCREIT achieved rental reversion of 16% in 3Q26, driven by lease renewal in Singapore and Australia. NPI grew 13% yoy in 9M26 due to positive reversions, rental escalations and acquisition of Tokyo DC 3.
- KDCREIT continues to build scale in hyperscale DCs. Potential acquisitions from sponsor pipeline, such as SGP9 in Singapore and a DC in Western Tokyo, are likely to materialise in 2028.
- KDCREIT has a resilient Singapore-centric portfolio and is well supported by sponsor Keppel. Maintain BUY. Target price: S$2.83.
Analysis
- Keppel DC REIT (KDCREIT) reported DPU of 8.571 S cents for 9M26 (+11.7% yoy), which is in line and accounted for 76% of our full-year forecast.
- Boost from Tokyo DC 3. Gross revenue and NPI grew 13.3% and 13.1% yoy respectively in 9M26, driven by positive reversions, rental escalations and acquisition of Tokyo DC 3 (completion: 19 Nov 25). NPI margin was stable at 86.7%. Higher effective interests in SGP 3 & 4 supported distributable income. Finance costs rose 28.1% yoy, reflecting additional borrowings to fund acquisitions and extension of land lease for SGP 7 & 8.
- Stronger rental reversion and occupancy. KDCREIT achieved rental reversion of 14% in 9M26 (1H26: 10%, 3Q26: 16%), based on renewed contracts that had commenced. New and renewal contracts were secured in Singapore and Australia. Contracted revenue-generating power capacity increased 1ppt qoq to 96%. WALE by lettable area was stable at 6.5 years.
Highlights
- KDCREIT achieved rental reversion of 16% in 3Q26, driven by lease renewal in Singapore and Australia. NPI grew 13% yoy in 9M26 due to positive reversions, rental escalations and acquisition of Tokyo DC 3.
- KDCREIT continues to build scale in hyperscale DCs. Potential acquisitions from sponsor pipeline, such as SGP9 in Singapore and a DC in Western Tokyo, are likely to materialise in 2028.
- KDCREIT has a resilient Singapore-centric portfolio and is well supported by sponsor Keppel. Maintain BUY. Target price: S$2.83.
Analysis
- Keppel DC REIT (KDCREIT) reported DPU of 8.571 S cents for 9M26 (+11.7% yoy), which is in line and accounted for 76% of our full-year forecast.
- Boost from Tokyo DC 3. Gross revenue and NPI grew 13.3% and 13.1% yoy respectively in 9M26, driven by positive reversions, rental escalations and acquisition of Tokyo DC 3 (completion: 19 Nov 25). NPI margin was stable at 86.7%. Higher effective interests in SGP 3 & 4 supported distributable income. Finance costs rose 28.1% yoy, reflecting additional borrowings to fund acquisitions and extension of land lease for SGP 7 & 8.
- Stronger rental reversion and occupancy. KDCREIT achieved rental reversion of 14% in 9M26 (1H26: 10%, 3Q26: 16%), based on renewed contracts that had commenced. New and renewal contracts were secured in Singapore and Australia. Contracted revenue-generating power capacity increased 1ppt qoq to 96%. WALE by lettable area was stable at 6.5 years.
BUY (Maintained)
Current price:
Target price:
Upside:
S$2.13
S$2.83
40.4%
Analyst
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