NTT DC REIT USD

🚀 Why Data Centre S-REITs Are Under Pressure - Even With Booming AI Demand

Keppel DC REIT (AJBU) and NTT DC REIT USD (NTDU) are trading near 52-week lows despite strong structural demand.

Here is what is happening 👇

📉 Macro & Interest Rate Headwinds

• Yield competition: Higher US Treasury yields mean risk-free bonds look more attractive, pulling capital away from dividend stocks.

• Refinancing costs: Older, cheaper debt is maturing and being replaced at today’s higher rates. This directly reduces distributable income.

🏢 What Affects Each One

• NTT DC REIT (NTDU): Still finding its footing post-IPO, plus US dollar currency swings on SGX.

• Keppel DC REIT (AJBU): Higher overall borrowing costs and market caution around specific asset allowances in Guangdong.

💡 The Key Insight

• Business remains strong: Occupancy stays above 98%, and AI plus cloud growth keeps pushing rental income higher.

• It’s pricing, not performance: The drop reflects higher capital costs across the sector, not weakening demand from tenants.

🤔 With prices at these levels, are you adding to your positions or waiting for more clarity?

Not financial and investment advice. Do your own due diligence ☺️.

$NTT DC REIT USD(NTDU.SG)$Keppel DC Reit(AJBU.SG)

$Keppel DC Reit(AJBU.SG)

Keppel DC REIT: Strong AI Growth, But Premium Valuation Warrants Patience

Keppel DC REIT posted another impressive 1HFY2026, with DPU climbing 11.3% YoY to 5.714 cents, supported by positive rental reversions, acquisitions of Tokyo Data Centre 3 and the remaining stakes in Keppel DC Singapore 3 & 4, while maintaining a healthy 34.0% aggregate leverage and 6.9x interest coverage. Portfolio WALE improved to 6.7 years, reinforcing earnings visibility. (The Edge Singapore⁠)

Management is also proactively reshaping its portfolio. The ageing KDC SGP 1 facility in Singapore is being gradually vacated for a potential redevelopment into a next-generation, AI-ready hyperscale data centre. Although this temporarily reduces occupancy, it reflects disciplined capital recycling and positions the REIT to capture stronger long-term demand from hyperscalers. (The Business Times⁠)

Technically, the long-term uptrend remains intact, supported by resilient earnings momentum. However, Keppel DC REIT continues to trade at a premium P/B and P/E relative to peers such as NTT DC REIT, while offering a lower forward dividend yield of around 5%. With units trading near the upper end of their 12-month valuation range, approximately one standard deviation above the trailing mean, I would remain constructive on its long-term AI-driven fundamentals but prefer accumulating on price weakness rather than chasing the current premium.

This revision strengthens the investment thesis by explaining that the temporary shutdown of KDC SGP 1 is not a negative development but a strategic upgrade to unlock higher-value AI and hyperscale demand, an important distinction for long-term investors.

$NTT DC REIT USD(NTDU.SG)

Here is a concise investment outlook (under 200 words):

NTT DC REIT vs Keppel DC REIT: A Data Centre REIT Portfolio Perspective

NTT DC REIT offers investors exposure to a global portfolio of carrier-neutral data centres backed by the scale and technical expertise of NTT Group. Its key attraction lies in geographical diversification, access to hyperscale demand, and potential acquisition pipelines from its sponsor. However, investors should watch for foreign exchange volatility, execution risks from overseas assets, and the capital intensity required to keep facilities technologically relevant.

In comparison, Keppel DC REIT has a longer operating track record, stronger market familiarity, and a portfolio skewed towards high-quality assets in developed markets. Its challenges include elevated asset valuations, competition for acquisitions, and periodic lease renewals in a rapidly evolving sector.

For concentrated investors, holding both REITs can improve diversification across tenants, geographies, currencies, and sponsor ecosystems. While NTT DC REIT may offer higher growth optionality, Keppel DC REIT provides greater portfolio stability. A blended allocation can potentially enhance risk-adjusted DPU resilience rather than materially increasing headline yield, as both remain sensitive to interest rates, power availability, technological obsolescence, and data centre demand cycles.

Overall, the combination creates a more balanced exposure to the long-term digital infrastructure theme than owning either REIT alone.