Keppel DC REIT FY2024: A Resilient Data Centre Play in the Age of AI Growth

Introduction

Keppel DC REIT (KDC REIT) continues to solidify its position as a leading data centre real estate investment trust in Asia-Pacific and Europe. The FY2024 investor presentation highlights a year of strong financial performance, strategic divestments, and portfolio expansion, driven by the growing demand for data storage and AI-powered cloud computing. This article dives into the key takeaways from KDC REIT’s latest financial year and what it means for investors looking at the digital infrastructure sector.

Kelsterbach Data Centre is a campus development featuring a total attributable lettable area of 540,869 sq ft located in Germany. Source: keppeldatacentres.com

Financial Performance: Strong Growth Amid Market Shifts

Keppel DC REIT recorded impressive financial growth in 2024:

• Gross Revenue: Increased 10.3% YoY to SGD 310.3 million, supported by acquisitions and strong rental reversions.

• Net Property Income: Up 6.3% YoY, reaching SGD 260.3 million.

• Distributable Income: Grew 3% YoY to SGD 172.7 million.

• Distribution Per Unit (DPU): Rose 0.7% YoY to 9.451 cents.

Despite higher finance costs and currency fluctuations, KDC REIT maintained positive earnings momentum through rental escalations and a disciplined portfolio strategy.

Strategic Portfolio Management: Divestments & Acquisitions

KDC REIT’s portfolio adjustments reflect its focus on high-yielding assets in prime data centre locations.

🔹 Major Divestment: Kelsterbach Data Centre, Germany

• Sold for €50 million (SGD 70.6 million), a 28% premium over its 2024 valuation.

• The move improves capital flexibility and aligns with KDC REIT’s pivot towards hyperscale clients.

  
  

🔹 Key Acquisitions

• Keppel DC Singapore 7 & 8: Acquired a 99.49% stake in these key Singapore data centres for SGD 1.38 billion, strengthening its home market position.

• Tokyo Data Centre 1: Purchased for JPY 23.4 billion (SGD 201 million), enhancing KDC REIT’s foothold in Japan.

These moves reinforce the REIT’s strategy of focusing on next-generation data centres catering to hyperscale providers like cloud service giants.

Operational Strength: High Occupancy and Growing Demand

• Portfolio Occupancy: 97.2%, showcasing continued strong demand for its facilities.

• Weighted Average Lease Expiry (WALE): 6.3 years, ensuring stable long-term income.

• Rental Reversions: Positive rental reversions of ~39% in FY2024, highlighting pricing power in a tightening supply market.

The growing reliance on AI, cloud computing, and 5G infrastructure is creating a bullish environment for data centres, positioning KDC REIT favorably for future rental growth.

Capital & Debt Management: A Balanced Approach

• Aggregate Leverage: 31.5%, leaving headroom for further acquisitions.

• Average Cost of Debt: 3.1%, reflecting prudent financial management.

• Debt Mix: 66% fixed-rate loans, mitigating interest rate risks.

Additionally, a SGD 1.1 billion equity fund-raising round in 4Q 2024 is set to provide additional capital for future expansion.

Future Outlook: AI & Hyperscalers Driving Growth

The data centre industry is experiencing rapid expansion, with:

• Global data centre supply growing by 15.6% YoY.

• Asia-Pacific demand hitting record highs, up 18.3% in 2024.

• Hyperscalers increasing their dominance, now accounting for 62.3% of KDC REIT’s rental income.

As AI-powered applications, cloud computing, and digital transformation accelerate, demand for scalable, high-performance data centres will surge. KDC REIT is strategically positioned to benefit from these trends.

Final Thoughts: A Smart Play for Long-Term Investors

Keppel DC REIT’s FY2024 performance demonstrates a well-executed strategy of capital recycling, portfolio optimization, and strong operational management.

For investors seeking exposure to the booming digital infrastructure space, KDC REIT remains a compelling choice with stable returns and long-term growth potential.

💡 Key Takeaway: With rising data consumption, cloud adoption, and AI advancements, Keppel DC REIT is a future-proof investment riding the digital wave.

Disclaimer: This article is for educational and informational purposes only and should not be considered financial or investment advice. All investments carry risks, including potential capital loss. Readers should conduct their own research and consult a qualified financial professional before making any investment decisions. The author and publisher are not responsible for any financial losses incurred based on the information provided.