The REIT is actively reshaping its portfolio. In Feb, it announced the sale of a data centre in Frankfurt for the equivalent of $70.6 million, which is a 28% premium over the property's valuation.
Koh notes that this data centre had the go-ahead to increase its capacity but Keppel DC REIT had more ambitious plans to redevelop it into something bigger. "The decision to divest was in line with Keppel DC REIT's renewed focus on hyperscale data centres," he says.
Meanwhile, the REIT's manager is on the lookout for acquisitions, as part of its efforts to actively rebalance its portfolio to capitalise on structural trends, such as generative AI.
According to Koh, the REIT is exploring Japan, South Korea and Europe. The REIT is keen to tap on its sponsor Keppel's pipeline but a new data centre SGP9 has yet to begin construction.
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In China, where Keppel DC REIT is present as well, demand for data centres is seen to grow thanks to the expected popularity of artificial intelligence applications.
Koh says that the REIT is working with its tenant in China, Bluesea Development to "execute the recovery roadmap" for Guangdong DC1 and DC2, both of which are seeing occupancy rates of just 30% now.
Keppel DC REIT has received more enquiries from prospective tenants. Management expects the actual signing of new leases to be a year later in 2026, the analyst says.
Citing the REIT's manager, Koh says valuation for the China data centres will remain stable.
He has trimmed his forecast for the RTEIT's DPU for the coming FY2026 by 4% but has raised the subsequent FY2027's estimate by 1%.
Keppel DC REIT closed at $2.18 on March 24, up 0.46% for the day and down 1.36% year to date.
