Data centre S-Reits power ahead on AI and cloud growth

[SINGAPORE] Data centre real estate investment trusts in Singapore (DC S-Reits) have demonstrated continued robust operating results in their latest business updates, with flat to higher distributions, amid structural demand from cloud and artificial intelligence.

For the period ended Jun 30, the three pure-play DC S-Reits reported high occupancy and double-digit rental reversions, with industry analysts also highlighting a broadly positive sector outlook, driven by rapid AI adoption and ongoing digitalisation.

Property consultancy JLL noted in its 2026 Global Data Center Outlook that nearly 100 Gigawatts of new data centres will be added between 2026 and 2030, doubling global capacity. The global data centre sector will likely expand at 14 per cent compound annual growth rate through 2030.

Similarly, Cushman & Wakefield’s Asia Pacific Data Centre H1 2026 Update Report noted that the Asia-Pacific data centre market held on to strong growth momentum in H1 2026, propelled by robust demand for AI workloads, cloud services and enterprise digital transformation. These broader industry tailwinds are reflected in the operating performance of the pure-play DC S-Reits.

Keppel DC Reit

Keppel DC Reit reported distributions per unit (DPU) rising 11.3 per cent year on year in H1 2026, with growth driven by stronger operating performance from positive reversions and escalations, and higher effective interests in Keppel DC Singapore 3 and 4.

Keppel DC Reit also achieved portfolio rental reversion of around 10 per cent for H1 2026. Its portfolio occupancy by lettable area stood at 92.5 per cent, following the Cardiff Data Centre lease expiry. Excluding this, occupancy would have been 95.3 per cent, similar to Q1.

With aggregate leverage at 34 per cent, the Reit retains meaningful debt headroom for future growth. It is undertaking proactive portfolio optimisation efforts, including evaluating asset repositioning, power intensification and redevelopment initiatives, capital recycling, and strategic acquisitions of high-quality data centres that can meet hyperscaler requirements.

Digital Core Reit

Digital Core Reit reported stable DPU for H1 2026 despite lower net property income, as higher distributions from associates largely offset the impact. The Reit also repurchased eight million units in H1 2026 at an average price of US$0.488, generating DPU accretion of around 0.4 per cent.

The Reit’s in-service portfolio occupancy remained high at 97.3 per cent, with weighted average lease expiry (WALE) at 4.3 years. The Reit secured new and renewal leases representing US$5 million of annualised rent and achieved strong cash rental reversions of 25 per cent.

Earlier in January, Digital Core Reit reached an agreement for its Linton Hall asset with an investment-grade global cloud service provider. The lease is expected to commence in December 2026, and is seen to generate around US$13.3 million in annualised net property income at the Reit’s 90 per cent share.

FSM Global analyst Joel Phua noted that while a temporary income gap at Linton Hall has paused near-term distribution growth, robust 25 per cent rental reversions and strategic unit buybacks underscore the portfolio’s underlying resilience. He has a “buy” rating on the Reit with a US$0.70 target price.

NTT DC Reit

Elsewhere, NTT DC Reit recorded positive leasing momentum post-initial public offering, with occupancy rising to 95.9 per cent following expansions secured across two data centres in the US and one in Singapore. Including committed leases, occupancy is expected to increase further to 99.2 per cent. Most committed leases are expected to begin contributing from its Q3 FY2026/27, providing further earnings visibility.

NTT DC Reit is targeting to hold its extraordinary general meeting by Q3 FY2026/27 regarding its potential change to the management fee structure to enhance alignment with unitholders.

Net property income for Q1 ended June exceeded IPO projections by 5 per cent, supported by lower taxes, lower operating costs and favourable foreign exchange impact. Distributable income, meanwhile, was 10.6 per cent above IPO projection. The Reit maintained a strong balance sheet, with aggregate leverage of 31.0 per cent and WALE of 4.3 years.

Other S-Reits that have exposure to data centres include Mapletree Industrial Trust , CapitaLand Ascendas Reit , CapitaLand India Trust , and Stoneweg Europe Stapled Trust (SERT) .

CapitaLand India Trust is expanding its data centre footprint, with several projects under development. It has successfully developed and leased its first liquid-cooled data centre to a global hyperscaler tenant in FY2026, with other data centre developments on track for completion by the end of 2026.

In August 2026, SERT announced that its dual-track data centre strategy, comprising both organic and inorganic pipelines, is expected to support the growth of its data centre exposure to 15 to 25 per cent by 2028 from its current exposure of 7.2 per cent.

Chan Rui Qi and Emelia Tan are directors with the Capital Market Development team at SGX

For more research and information on Singapore’s REIT sector, visit sgx.com/research-education/sectors for the SREITs & Property Trusts Chartbook.