This article first appeared on GuruFocus .
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Distributable Income:Increased by about 19% year on year for one-half 2026.
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Distribution Per Unit (DPU):Increased by 11% year on year for one-half 2026.
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Contracted Power Capacity:Stands at about 95%, indicating revenue-generating capacity.
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Portfolio Weighted Average Lease Expiry:Extended to 6.7 years.
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Portfolio Reversion:Approximately 10% for the period.
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Cost of Debt:Competitive at 2.6%, with expectations to hover between 2.6% and 2.8% for the year.
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Aggregate Leverage:Improved to 34% as of June 30, 2026.
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Interest Coverage Ratio:6.9 times.
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Portfolio Occupancy:92.5%, or 95.3% excluding Cardiff Data Center.
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Fixed Rate Borrowings:87% of borrowings are on fixed rate.
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Natural Hedge:About two-thirds for overseas portfolio to mitigate foreign-currency risk.
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Release Date: July 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Keppel DC REIT ( KPDCF ) reported a strong financial performance for the first half of 2026, with distributable income and distribution per unit (DPU) increasing by 19% and 11% year-on-year, respectively.
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The REIT disclosed that 95% of its power capacity is contracted and revenue-generating, providing a more meaningful measure of utilization than traditional occupancy metrics.
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The portfolio's weighted average lease expiry was extended to 6.7 years, supported by contract renewals and new contracts in Singapore and Australia.
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Keppel DC REIT ( KPDCF ) maintains a competitive cost of debt at 2.6% and has a healthy balance sheet with over $670 million in debt headroom.
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87% of borrowings are on fixed rates, limiting interest-rate volatility, and the REIT has a natural hedge for about two-thirds of its overseas portfolio, mitigating foreign-currency risk.
Negative Points
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Finance costs increased year-on-year due to acquisition-related borrowings drawn in the fourth quarter of 2025.
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The divestment of the Kelsterbach data center in 2025 led to a partial offset in income growth.
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Portfolio occupancy decreased to 92.5% due to contract expiry at the Cardiff Data Center, although excluding this asset, occupancy would be 95.3%.
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Interest rates are expected to remain elevated, which could impact financing conditions and investment spreads.
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The near-term macroeconomic environment remains uncertain, posing potential challenges for future growth and investment opportunities.
Q & A Highlights
Q: Could you explain the increase in management fees in units from 27% to 41%? Also, regarding rent reversions, does the 5% in the second quarter include the renewal secured for Gore Hill? A: The increase in management fees in units is due to the Manager opting to receive fees in units for newly acquired assets, aligning interests with unitholders. The 5% rent reversion in Q2 does not include Gore Hill; its effects will be seen in Q3, likely bringing reversions back to a low-teens range. - Loh Hwee Long, CEO and Adam Lee, CFO
Q: Can you provide updates on vacancies at Cardiff and SGP1 and 2, and the partial repayment of NetCo Bonds? A: Cardiff is actively being leased, and SGP1 is being prepared for potential redevelopment. The NetCo Bonds' partial repayment relates to principal repayment. - Loh Hwee Long, CEO and Adam Lee, CFO
Q: Why disclose contracted power capacity, and does it include Chinese assets? A: Contracted power capacity offers a more accurate measure of utilization than traditional metrics. Yes, it includes Chinese assets. - Loh Hwee Long, CEO
Q: Are there plans for acquisitions given the debt headroom, and which markets are being focused on? A: We are evaluating deals but are not in a hurry. Focus remains on markets with high entry barriers and strong demand, such as Singapore, Japan, Korea, and parts of Europe. - Loh Hwee Long, CEO
Q: Can you clarify the rent-reversion computation and its impact on DPU growth for 2026 vs. 2027? A: The computation methodology for rent reversion remains unchanged. DPU growth is managed carefully to balance the ramp-down of SGP1 and ensure a stable growth trajectory. - Loh Hwee Long, CEO
Q: What is the outlook for reversions in Singapore, and how does AI influence potential demand? A: Reversions are expected to moderate but remain strong due to constrained supply. AI increases demand, potentially driving up prices for available capacity. - Loh Hwee Long, CEO
Q: Can power be reallocated between data centers, and what is the outlook for 2027 lease expiries? A: Power reallocation depends on grid capacity and regulatory approval. Lease expiries in 2027 are expected to be similar to 2026, with more significant renewals in subsequent years. - Loh Hwee Long, CEO
Q: Are there redevelopment plans for Keppel DC8 and 9, and what is the gap between spot and in-place rents in Singapore? A: Redevelopment potential exists if new power can be secured. The portfolio is assessed to be under-rented compared to spot rents, offering room for future growth. - Loh Hwee Long, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
