Keppel DC REIT DPU Climbs 13.2% YoY in H2 2024

Keppel DC REIT, a leading data center real estate investment trust (REIT) in Asia, has reported a significant 13.2% year-on-year (YoY) increase in its distribution per unit (DPU) during the second half of the financial year 2024 (H2 2024). This impressive growth was driven by a combination of factors, including the acquisition of Tokyo Data Centre 1, strong reversions, and the favorable outcome of a dispute settlement between Keppel DC Singapore 1 Limited and DXC Technology Services Singapore.



The acquisition of Tokyo Data Centre 1 expanded Keppel DC REIT's portfolio and increased its income-generating assets, contributing to the DPU growth. Additionally, strong positive reversions, which refer to the increase in rental income when leases are renewed at higher rates, further boosted the REIT's financial performance. The favorable outcome of the dispute settlement also played a role in the DPU increase, highlighting the company's ability to effectively manage and resolve disputes.

The acquisition of Tokyo Data Centre 1, along with strong reversions and the favorable dispute settlement outcome, contributed to a 20.2% YoY increase in income available for distribution during the period, reaching $91.8m. Furthermore, net property income grew by 8.5% YoY to $127.6m. As of 31 December 2024, the group's portfolio occupancy remained high at 97.2% with a portfolio weighted average lease expiry of 6.3 years, indicating a strong financial position.

The Japanese data center market presents potential future growth opportunities for Keppel DC REIT. Japan is a major global economy with a strong demand for data center services, driven by the increasing adoption of cloud services, artificial intelligence, and the Internet of Things (IoT). According to a report by Structure Research, the Japanese data center market is expected to grow at a CAGR of 10.5% from 2021 to 2026, reaching a market size of $12.5 billion (Structure Research, 2021).

To maintain and build upon this momentum, Keppel DC REIT should consider strategic acquisitions in high-growth markets, optimizing its portfolio mix, actively managing its assets, diversifying revenue streams, maintaining a strong balance sheet, and focusing on ESG initiatives. By implementing these strategic initiatives, Keppel DC REIT can continue to drive DPU growth and create value for its investors.

In conclusion, Keppel DC REIT's 13.2% YoY increase in DPU during H2 2024 was driven by the acquisition of Tokyo Data Centre 1, strong reversions, and a favorable dispute settlement outcome. The Japanese data center market presents attractive growth opportunities for the company, and by implementing strategic initiatives, Keppel DC REIT can maintain and build upon its momentum, further boosting its DPU in the coming years.

Reference(s):
Keppel DC REIT. (2024). Keppel DC REIT DPU climbs 13.2% YoY in H2 2024. Retrieved from
Structure Research. (2021). Japan Data Center Market. Retrieved from