- Keppel DC REIT reported a strong 1Q26 update, with a 13.2% y-o-y increase in DPU to 2.833 cents.
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- Occupancy remained stable at 95.6%, WALE stayed healthy at 6.5 years and rental reversion was strong at around +51%, indicating positive leasing spreads.
- Meanwhile, aggregate leverage stood at 35.1%, down 20bps q-o-q, aided mainly by depreciation of JPY and EUR against S$. Average cost of debt improved 20bp q-o-q to 2.6%, reflecting the full-quarter effect of lower-cost JPY and S$ acquisition loans drawn in 4Q25.
Our views.
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- With a very healthy aggregate leverage, and further improvement in borrowing costs, we believe Keppel DC REIT’s capital management metrics will remain fairly stable for the rest of the year, as only ~8.5% of its loans are due for refinancing in FY26.
- With the delay in the redemption of the NetCo bonds, this will be a positive surprise to our projections (previously assumed that the bonds will be redeemed at the end of 1Q26) and will continue to contribute coupons of ~S$11mil per annum.
Reiterate BUY
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