Stripping out the effect of the preferential offering, the REIT's DPU would be 2.74 cents and 7.87 cents for its 3QFY2025 and 9MFY2025 respectively.
With expectations that further rental reversions can be commanded in the current 4QFY2025, thereby inspiring some analysts to raise their respective target prices.
In its Oct 27 note where its "buy" call was kept, OCBC Investment Research points out that this REIT has one of the longest portfolio weighted average lease expiry within the sector.
Also, it has no debt maturities for the remainder of the year and hence, there would be relatively lower refinancing risks as compared to most peers, says OCBC, which has raised its fair value from $2.59 to $2.66.
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The acquisition of two high-quality AI-ready hyperscale data centres in Singapore will strengthen KDCREIT’s position as a top data centre owner in the region and reduce its percentage of portfolio exposure to China, says OCBC.
In his Oct 27 note, Darren Chan of PhillipCapital expects the REIT's average cost of debt, which has declined further to 2.9% in 3QFY25 from 3.1% in 1QFY25, to dip further to 2.7% in FY2026.
For now, aggregate leverage has improved 20bps to 29.8% from bank loan repayments, but is expected to rise to around 34% upon completion of the Tokyo DC 3 acquisition, says Chan, who has kept his "neutral" call but with a higher target price of $2.40, from $2.33 previously.
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On the other hand, there's no improvement in its long-running issue with its data centres in Guangdong.
To date, Bluesea, the master lessee, owes over $45 million in unpaid rent. The REIT will continue to make provisions for the overdue rent under its loss allowances, says Chan.
Nonetheless, global data centre demand remains strong and Keppel DC REIT is on the lookout for third-party acquisitions in established data centre hubs such as Japan, South Korea, and Europe.
Sponsor Keppel has a pipeline of assets for Keppel DC REIT to acquire, but, according to Citi's Brandon Lee, there is nothing material in the coming 3 to 6 months.
First, China is "definitely" a "no" until the existing issues in Guangdong are resolved, while SGP 9 in Singapore will take another 18 to 24 months to be completed.
The Taiwan data centre campus, which will be ready for service next year, is "quite interesting" and the REIT will consider "if it's ready".
Last but not least, the REIT is also keen on Keppel's floating data centre, which is committed but not completed. If so, there is a distinct difference between this asset and what the REIT now owns: water rights may not fit into the definition of real estate as it does not have a conventional title, says Lee.
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Meanwhile, for organic growth, the REIT is undertaking AEI at one of its data centres, the SGP 8, so as to convert half a floor, or around 13,000 sq ft, into a data hall.
When done, this move will support earnings from FY2027, estimated by Xavier Lee of Morningstar to lift revenue at this asset by 15%.
Nonetheless, Lee, who has a three-star rating (out of five) on this counter, maintains his view that the units are already fairly valued.
"While structural demand for data centres remains strong, we recommend investors wait for a more attractive entry point," says Lee, whose target price is $2.42.
