Distribution per unit for the July 14 to March 31 period was 5.56 US cents, 2.6% above forecast, thanks partly to lower borrowing costs. On an annualised basis, DPU would have been 7.81 US cents.
As at March 31, portfolio occupancy improved 0.5 percentage points q-o-q to 95.1%, while committed occupancy was higher at 98.5%.
Rental reversion, meanwhile, was up 8.5% for FY2026, or a jump of 13.7% including the NTT Singapore renewal at SG1, the Singapore-sited data centre, that will be recorded in 1Q FY2027 and portfolio valuation up 11.3% to US$1.67 billion.
Gearing was down 29.2% from 32.5% q-o-q while total debt fell to US$517 million from US$523 million.
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In his May 14 note, Dale Lai of DBS Group Research has not only kept his "buy" call on this stock, he has raised his target price slightly as well from US$1.20 to US$1.30, after he raised his FY2027 DPU estimates by 2.5% to reflect better-than-expected operational numbers.
"Forward earnings visibility remains well supported by NTT DC REIT’s high committed occupancy, positive rental reversions, and strong tenant retention rates across its portfolio," says Lai.
"Based on our understanding, management is already in advanced renewal discussions with the respective tenants and remains confident of securing renewals at healthy positive rental reversions, underpinned by continued robust demand for high-quality data centre capacity," adds Lai.
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Lai sees several potential near-term catalysts that could further support a re-rating of the stock.
These include a potential revision to the management fee structure targeted for implementation sometime in 3Q FY2027; possible index inclusion following the publication of its first annual report, likely in July, and also, the announcement of a maiden accretive acquisition.
Jonathan Koh of UOB Kay Hian has similarly stayed bullish on this stock.
From an initial target price of US$1.42, he figures NTT DC REIT is worth US$1.43, with an "attractive" FY2027 DPU yield of 7.7% and 8.0% for FY2028, which is the highest among data centre REITs, NTT DC REIT remains a "buy" for Koh.
The REIT, according to Koh, is exploring various acquisitions, including a hyperscale 24MW DC in Frankfurt valued at US$450 - 500 million in 1HFY2027, which is expected to provide an NPI yield of above 6%.
The REIT is also in talks with other entities within the NTT Group to acquire stabilised data centres within Japan, including a 20MW DC in Tokyo, which is expected to provide an NPI yield of above 5%.
NTT DC REIT units closed at US$1.01, down 1.94% for the day.
