Keppel DC REIT – Strong DPU growth on robust rental reversions October 26, 2026 9

PSR Recommendation: ACCUMULATE Status: Maintained
Last Close Price: 2.05 Target Price: 2.33
  • 3Q26/9M26 DPU of 2.86/8.57 Singapore cents (+12.6%/+11.7% YoY) was in line with our expectations, forming 25%/74% of our FY26e forecast. Growth was driven by the accretive acquisition of Tokyo Data Centre 3, positive rental reversions and escalations across the portfolio, and increased effective interests in Keppel DC Singapore 3 & 4. These were partially offset by the divestment of Kelsterbach Data Centre, the absence of income from Cardiff DC, and higher finance expenses.
  •  3Q26 portfolio occupancy improved 0.5 ppt QoQ to 93%, while contracted power capacity edged up to c.96% (2Q26: c.95%). Rental reversions remained strong at c.16% in 3Q26 (9M26: c.14%), while revenue at Gore Hill DC will more than double as new contracts commence in 4Q26.
  •  We maintain ACCUMULATE with a lower DDM-derived TP of S$2.33 (prev. S$2.46), as we raise our cost of equity by 25bps to reflect the higher interest rate environment. We raise our FY26e DPU estimate by 1% after incorporating Tokyo DC 4 & 5 and the associated private placement. Our estimates exclude contributions from the Guangdong Data Centres. We expect FY26e rental reversions to remain around the 9M26 level of c.14%, with only 1.1% of leases by GRI due for renewal in 4Q26. The Keppel DC Singapore 8 AEI remains on track for completion in 2H27, providing further upside to DPU growth. The stock currently trades at a FY26e DPU yield of 5.5%.

 

 

 

 

 

 

 

 

The Positive
+ Healthy balance sheet despite recent acquisitions. Aggregate leverage increased 220bps
QoQ to 36.2% following partial drawdown of JPY loans to fund Tokyo DC 4 & 5, rising to
38.8% pro forma following completion on 1 Oct 2026. 3Q26 cost of debt remained stable
QoQ at 2.7%, while ICR remained healthy at 6.5x. We expect FY26e cost of debt to remain at
c.2.7%, with the proportion of fixed-rate debt expected to increase from 69.6% to the high
80% range by December 2026 as JPY interest rate swaps take effect.

The Negative

– No material improvement at the Guangdong DCs. Rent collection from Bluesea remains
unresolved, with loss allowances continuing to weigh on earnings. Recovery of over S$65mn
in overdue rent is unlikely in the near term.

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About the author

Profile photo of Darren Chan

Darren Chan
Research Analyst
PSR

Darren has over three years of experience on the buy-side as a fund manager. During his time as fund manager, he has managed multiple funds and mandates including dividend income, growth, customised, Singapore focused and regionally focused funds. He graduated from the University of London with a First-Class Honours degree in Banking and Finance.

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