Keppel DC REIT reported a stellar set of 1Q26 results. Gross revenue and net property income (NPI) rose 18.4% and 19.4% y-o-y to S$121.0m and S$105.2m respectively. This was driven by organic growth and contributions from the acquisition of Tokyo Data Centre 3, but partially offset by the divestment of an asset in Germany.
Strong start to FY26 with 1Q26 results slightly above our expectations
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Management expects its full year average cost of borrowing to hover around 2.6-2.7%. Every 25bps increase in interest rates would impact its 1Q26 pro forma DPU by approximately -0.3%.
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Portfolio rental reversions were solid at approximately 51%, but attributable to smaller leases that account for a small proportion of its portfolio
Notwithstanding the ongoing Middle East conflict, Keppel DC REIT was able to deliver healthy operating metrics. Portfolio rental reversions came in at a robust 51% which came largely from Singapore, although we estimate that this was attributed to only approximately 0.3% of its rental income. 6.1% and 6.0% of Keppel DC REIT’s rental income will expire over the remainder of FY26 and FY27, respectively.
We expect rental reversions to moderate, as some of these expiring leases already had their contracted rates marked to market over the past couple of years.
Overall portfolio occupancy inched down 20bps q-o-q at 95.6%.
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Above is an excerpt from a report by OCBC Group Research. Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.
