Keppel DC REIT (SGX: AJBU) is a resilient gem in the data center space, offering stability and income in an AI-driven world—making it a solid hold for long-term investors, though not a screaming bargain at current levels. As of December 2025, trading at S$2.24, it's fairly valued to mildly undervalued, with a P/NAV ratio of 1.42x (NAV S$1.58), suggesting a slight premium justified by its high-quality assets. The 4.46% trailing yield (DPU S$0.10) is attractive for income seekers, covered 1.0x by earnings, and projected to grow 1-2% in 2026 amid hyperscaler demand.
Strengths shine through: 96% occupancy, 6.5-year WALE, and a S$5 billion portfolio positioned for AI tailwinds (e.g., cloud expansions). Q2 2025 DPU up 1.9% to S$0.0268 reflects this resilience. Analysts' consensus target of S$2.61 (16% upside) from 15 firms reinforces "Buy" sentiment, with DCF models estimating intrinsic value at S$2.60 based on 5% cap rate and 3% perpetual growth.
However, risks like 40.5% gearing and tenant concentration (top 10 ~80%) warrant caution—rate cuts help, but slowdowns could pressure. Overall, it's undervalued for growth-oriented income plays.
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