Keppel DC REIT has reported a distribution per unit (DPU) of 2.503 cents for the 1QFY2025 ended March 31, 14.2% higher y-o-y, due to contributions from acquisitions and a strong portfolio performance.
Distributable income for the quarter surged by 59.4% y-o-y to $61.8 million.
Gross revenue rose by 22.6% y-o-y to $102.2 million while net property income (NPI) increased by 24.1% y-o-y to $88.1 million.
The higher revenue and NPI were mainly from the acquisitions of Keppel DC Singapore 7 & 8 and Tokyo Data Centre 1. They were also attributed to higher contributions from contract renewals and escalations in FY2024 and are partly offset by the divestment of Intellicentre Campus and from the one-off dispute settlement sum at Keppel DC Singapore 1.
According to the REIT, the Guangdong data centres reported an income net off via loss allowances, resulting in an impact of 0.249 cents to the REIT’s 1QFY2025 DPU. The Guangdong data centres’ rental income and coupon income continue to be recognised under gross revenue and finance income; its corresponding netted off via loss allowance will be recognised in property expense and other trust expenses respectively.
As at March 31, the REIT’s portfolio occupancy stood at 96.5%, down from 98.3% in the same period the year before. Portfolio weighted average lease expiry (WALE) stood at 7.1 years, down from last year’s 7.4 years.
See also: Keppel Pacific Oak US REIT’s 1QFY2025 distributable income falls by 19.3% y-o-y to US$9.6 mil
The REIT also reported a positive portfolio reversion of 7% with no major contract renewals in 1QFY2025.
In its update, it says it will look at conducting acquisitions as a parallel growth driver with its target markets being in Japan, South Korea and Europe.
As at March 31, Keppel DC REIT’s aggregate leverage stood at 30.2%, 130 basis points (bps) lower compared to the quarter before. Its interest coverage ratio stood at 5.8 times, 0.5 times higher q-o-q.
See also: Sabana REIT reports DPU of 0.86 cents for 1QFY2025 on higher NPI of $16 mil
Looking ahead, the REIT manager notes the “short-term disruptions” in the data centre sector, although the rise of competing artificial intelligence (AI) models such as DeepSeek could “reshape expectations” around AI infrastructure needs. The evolving governance behind AI and geopolitical events could also introduce “new layers of complexity and regulatory uncertainty” for data centre demand.
In addition, the REIT believes generative AI (gen AI) workloads will be behind most of the growth in global data centre capacity with a projected compound annual growth rate (CAGR) of 39% until 2030.
“Agentic AI, requiring low-latency edge environments, will also boost demand for data centres serving AI inference workloads,” says the REIT.
Currently, inference AI constitutes 20% of the total AI demand, while training AI makes up 80%. This trend is expected to reverse to 2028, with inference AI rising to 80% and training AI decreasing to 20% due to increasing demand for localised data centre capacity to meet low-latency requirements of AI-driven applications.
The sustainability of AI growth will also depend on various factors including power availability, chip supply and the economic viability of AI monetisation, the REIT adds.
Units in Keppel DC REIT closed 6 cents higher or 3.02% up at $2.05 on April 16.
