Keppel DC REIT raises distribution per unit 11.7% in first 9 months of 2026

Key Facts

Keppel DC REIT raised its distribution per unit by 11.7% in the first nine months of 2026, according to its third-quarter operational update. The trust attributed the improvement to strong operating performance, contributions from acquisitions and increased effective interests in Keppel DC Singapore 3 and 4. It said higher financing costs and an increase in units in issue partly offset the gains. The update highlights per-unit distribution growth alongside the trust's expanding operations, with financing costs and a larger unit base remaining factors affecting distributions.

Gross revenue rose to S$365.298 million during the period from S$322.440 million in the corresponding period, while net property income increased to S$316.794 million from S$280.213 million. Revenue grew 13.3%, compared with a 13.1% increase in net property income. The trust said the increase in net property income mainly reflected improved rents on renewals and contractual rental escalations. The acquisition of Tokyo Data Centre 3 also contributed to higher income. These factors were partly offset by the divestment of Kelsterbach and the absence of income from Cardiff.

Financing costs rose to S$46.693 million in the nine months from S$36.444 million a year earlier, an increase of 28.1%. This means financing expense grew faster than revenue and net property income during the period. The trust said distribution growth also benefited from operating performance, acquisition contributions and increased effective interests in Keppel DC Singapore 3 and 4. But it noted that financing costs and the increase in units in issue tempered the effect of these contributions on distribution per unit. The average cost of debt was 2.6% during the period, while the interest coverage ratio for the last 12 months was 6.5 times as of 30 September.

Portfolio occupancy was 93.0% on 30 September, compared with 92.5% in the second quarter. Meanwhile, the portfolio's weighted average lease expiry fell to 6.5 years from 6.7 years. Aggregate leverage was 36.2%, up 220 basis points from 30 June. The trust linked the increase in leverage to partial drawdowns of yen loans to fund the acquisition of Tokyo Data Centre 4 and 5. These figures reflect portfolio and financing conditions at the end of the third quarter, after acquisitions had contributed to income growth during the period.

The acquisition of Tokyo Data Centre 4 and 5 was completed on 1 October, after the nine-month period ended, and therefore is not included in its results. The trust estimated that the deal would add 2.0% to distribution per unit. It also expected revenue from Gore Hill Data Centre to more than double when new leases commence from the end of 2026. Across the sector, the trust said power availability remains the main constraint on developing new data centres. It added that AI workloads are expected to account for 50% of data-centre demand in Asia-Pacific by 2030.

In trading, the trust's units rose 3.9%, or S$0.08, to close at S$2.13 on Friday, 23 October 2026, after the results were announced. Distribution information set an advance distribution for the period from 1 July to 9 September at 2.261 cents per unit. It is scheduled to be paid on 23 November 2026. In the previous annual comparison, distribution per unit for financial year 2025 increased 9.8% to 10.381 cents, which the trust attributed to acquisitions and higher contributions from lease renewals and rental escalations.