Data Center REITs Comparison: Who’s the Champion?

Artificial Intelligence (AI) have been the craze for the last 1 to 2 years with many US Tech stocks especially the magnificent 7 hitting records after records in share price appreciation. As AI and Machine Learning consume a lot of data, Data Center REITs will be in demand. For investors, Data Centres represent a good way to participate in the rising demand for AI technologies. In this article, I will compare 3 Data Center REITs and decide who emerge as champion.

Keppel DC REIT

Keppel DC REIT is a pure play Data Center REIT as the REIT invests mainly in data centres to support the digital economy. For half year ended 30 June 2024, Keppel DC REIT reported revenue increase by 11.9% to S$157.1 million while net property income increase by 4.2% to S$132.6 million. DPU dropped by 9.9% to 4.54 cents. However, compared to 2H 2023, DPU actually increase by 5.0%. Portfolio occupancy remains healthy at 97.5% while gearing ratio is 35.8%. Cost of debt is 3.5% with interest coverage ratio of 5.1 times. In terms of share price, Keppel DC REIT is up 17.1% year to date. You can view the REIT website here.

Digital Core REIT

Digital Core REIT is another pure play Data Center REIT listed in Singapore. However, its data centre assets are mainly located in the US and its sponsor is also a listed US REIT. For the first half 2024, Digital Core REIT reported revenue dropped by 9.6% to US$48.2 million while net property income dropped by 13.4% to US$30.4 million. DPU dropped by 6.3% to US1.80 cents. Portfolio occupancy remains health at 97% while gearing ratio is also low at 34.4%. However, cost of debt is higher than Keppel DC at 4.1%. Interest cover is also lower at 3.0x. In terms of share price, Digital Core REIT has severely underperform the REIT index as well as Keppel DC REIT. The share price dropped 8.33% year to date. You can view the REIT website here. 

Mapletree Industrial Trust

Mapletree Industrial Trust is not a pure play Data Center REITs. Data Centres only constitute 55.2% of its portfolio while business park and industrial assets make up the rest. For 1QFY24/25 results, Mapletree reported revenue is up 2.7% to S$175.2 million while net property income is up 1.3% to S$132.5 million. DPU increase by 1.2% to 3.43 cents. Portfolio occupancy is at 91.9% which is lower than Keppel DC and Digital Core REIT. Gearing ratio is at 39.1% which is the highest among the 3 Data Center REITs. Cost of debt is at 3.2% with interest coverage ratio of 4.7x. In terms of share price, Mapletree Industrial Trust is up just 1.2% year to date. You can view the REIT website here.

Conclusion

In this article, I compared three Data Center REITs and their financial metrics and share price. In terms of share price, Keppel DC clearly emerge as the champion. Its financial metrics is better too among the 3 Data Center REITs. However, investors need to do their due diligence before investing in any of these REITs.