NTT Data Centre REIT IPO Flop- Stuck at US$1 Per Unit On Debut

NTT Data Centre REIT (“NTT DCR”) IPO debut on July 14, 2025 was extremely disappointing. Its closing price on its first day of trading ended at a miserable US$1 per unit which was its IPO price. This is certainly unlike most of the SGX IPOs where prices usually surge by 10% on debut as many prospective investors are unable to get their hands on the shares during the IPO. 

Anyway, it maybe a blessing in disguise for many folks who are unable to get their hands on NTT DCR. I really have doubts on the sustainability of the 7.5% distribution yield as I do not think the management will maintain a 100% payout ratio for the longer term and it is getting too gimmicky.  Also, in my previous post, I have reiterated on the often forgotten point that the trust deed only permits not more than 9.8% shareholding by any investor (except for the sponsor 25% limit) which can have devastating consequences during crisis. 

Parting Thoughts- Personal View

Despite the risks as aforesaid mentioned, if the price of NTT DCR were to drop more than 10%-20%, it may serve as a good entry point (with additional safety buffer) to accumulate some units at an attractive distribution yield.

Keppel Ltd Rising From The Ash- Transformation On Target and 4.39% Dividend Yield For Waiting.

Recently, the share price of Keppel Ltd finally roared back to life after being in a limbo for the past 2 years. From its share price of S$6.87 per share as at beginning of January 2025, it has now hit an improved market valuation of S$7.74 per share as at 11 July 2025. This is an impressive 12.7% capital appreciation in 2025 alone for all retail investors. Congrats to all fellow shareholders who are holding on to Keppel Ltd and have subscribed to the revised asset light model strategy which focuses now on building up recurring income from management of investment assets. For myself, Keppel Ltd has been my best performing non-banking stock with a total gain of +S$22K (including S$6.2K of dividends) which is a +27.8% return. I had been accumulating shares of Keppel Ltd from May 2023 to November 2024. I have listed below the reasons for the sudden rise in the market price of Keppel Ltd.

1. The Piyush Gupta Effect

Personally, I think that this is the main catalyst for the recent spike in the share price of Keppel Ltd. Once Keppel Ltd announced the appointment of the ex-CEO of DBS as its deputy Chairman and non-executive independent director, the market became mad with excitement. Piyush has a stellar strong track record in transforming DBS into a leading digital bank in Singapore. His experience in driving digital transformation and innovation, as well as his leadership in navigating complex business environments, is seen as a valuable asset for Keppel as it reinvents itself as a global asset manager. 

Strangely enough, the share price of Keppel Ltd seems to have suddenly been re-rated by analysts and the entire market by this single announcement and the share price started soaring. Other supplementary reasons for its rise from the ash are as per below:

2. Strong Financial Results 

Keppel Ltd Q1 2025 net profit rose 25% year-over-year, driven by stable infrastructure earnings and a 9% increase in asset management fees-S$96 Mil. FY 2024 profit (excluding offshore & marine) increased by 5%, with data-center margins up ~45% thanks to AI and digital infrastructure tailwinds.

3. Robust Asset Monetisation

Since FY2023, the monetisation of non-core assets has been substantial: S$347 Mil in Q1 2025 alone and S$4.8 billion cumulatively since 2020. Analysts estimate another upcoming S$550 Mil asset sale pipeline in India and Singapore.

4. Recurring Revenue and Asset Manager Pivot

Keppel’s Vision 2030 strategy has rebalanced earnings towards recurring income—from 60% in 2022 to over 80% in Q1 2025 from infrastructure, fees, and data centers.

Its commitment to manage S$200 Billion AUM by 2030 is advancing, with S$88 Billion reported end-2024, and another S$4.9 Billion raised in Q1 2025.

5. Strategic Partnerships & Capital Inflows

Keppel has secured S$2 Billion in institutional investments for data centres, education, and sustainable urban renewal funds. It has also recently partnered with Asian Infrastructure Investment Bank (“AIIB”) for a S$1.5 Billion green-infra investment program across Asia.

Parting Thoughts- Personal Views on Keppel’s Outlook.

Based on its historical annual dividends of S$ 0.34 per share and its market price of S$7.74 per share as at 11 June 2025, this is an annualized dividend yield of 4.39%. For myself as a dividend investor, this is still somewhat attractive to me taking into account Keppel’s target to grow its asset under management to S$200 Billion by 2030 and I will be holding on to my remaining shares. Saying that, from a risk management perspective, I will not be adding on to my current investment into Keppel Ltd as it already made up close to 10% of my gross portfolio value and I have in fact sold off part of my holdings last month to take some profit off the table. Hopefully, Mr Gupta will be able to put in some of his magic into enhancing further growth opportunity for Keppel Ltd for all investors. Let’s wait and see! :)     

Don’t Give Too Little Credit To The People of Singapore.

I came across 1M65 Mr Loo’s latest videos of his visit to Shenzhen and Hong Kong where he came away with the proclamation that retail business in Singapore will soon be in bad shape with the opening of the RTS to Johor Bahru. In addition, worst part of all of this is that he has strangely mentioned that the people in China and Hong Kong are all more competitive and hardworking than Singaporeans but struggling in their daily lives and thereafter, he made a point that the only sole reason that Singapore economy and its people are still in better shape is due to our strong Singapore Government leadership. 

So is he saying that other governments are not as good as the Singapore government when sometimes it is not something that can be compared apple to apple especially for a gigantic and complicated country like China? Also, is it a right assertion to say that Singaporeans are not as competitive and hardworking than folks in other countries? Maybe Mr Loo has been mixing with the wrong crowd. I have known many Singaporeans who are working lots of overtime and even during the weekend on their jobs. I have also seen many Singaporeans hungrily scouting for new business opportunities and pipelines for their organization and are very highly driven. There will always be different types of people in every society of highly driven vs those that only desire a “simpler” life in China, Hong Kong and also Singapore. 

Surely, there is no need to discredit his own fellow Singaporeans just to score brownie points with regard to the SG government? Instead, is it not the competitive advantage from Tripartism (collaboration between local workers, businessmen and the SG government), which has been – and continues to be – one of the cornerstones of Singapore’s economic, social and political development and success thus far?

DBS $3 PayLah Weekly Cashback Is Back! 12 July 2025 To 27 September 2025- Don’t Miss It!

 

Hi Folks, awesome news! DBS is bringing back its popular S$3 PayLah cashback at hawker centres every Saturday for the first 160,000 people who uses PayLah to scan and pay at participating stalls from this Saturday (12 July 2025) onwards. I vividly recalled that the first cashback promotion used to be every Friday. So why did they change it Saturday instead? Rumors has it that many elderly folks were complaining about having to compete with younger working crowd and thus unable to enjoy the offer. Apparently, the move to Saturday morning will benefit more elderly folks since the younger ones will not be able to wake up early to compete given that they are busy partying late into the night to let their hair down on Friday (last working day of the week)…haha. 

Anyway, the S$3 cashback from PayLah may not be all good news for me. The last time DBS run this promotion, my favourite economic Bee Hoon stall started boosting a super long queue from 7.30am to 8.30am which rendered me too impatient to queue and buy it. Looks like I will have to settle for fishball noodle instead….haiz.

NTT Data Centre REIT IPO- Another Ticking Time Bomb- 3 Reasons to Stay Away.

There is another upcoming data centre REIT IPO on SGX by Nippon Telegraph and Telephone (“NTT”) of some of its data centres in order to raise funding of up to US$864 Mil on SGX. NTT is dangling a big fat carrot of between 7% to 7.5% annual distribution yield to attract investors. One of the cornerstone investors is our own Singapore sovereign wealth fund, GIC which invested US$100 Mil. Nevertheless, my personal view is that NTT data centre REIT will just be another ticking time bomb and I will be staying far away from this REIT for 3 main reasons:

(Please click here for those who preferred the You-Tube version)

1. Handicapped Shareholder/Unitholder Structure in Trust Deed Doomed for Failure.

This is the part that many retail investors got ensnared. All investors can only hold up to 9.8% holdings in NTT Data Centre REIT (with the exception of Sponsor who can hold up to 25%). I have written it many times on the red flag of the exemption on withholding tax for crafting US properties as a REIT structure.

Extract of the restriction on shareholding

Basically, our global economies will go through market cycles. During economic crisis or crisis caused by the REIT itself, the REIT cannot save itself by rights issuance exercise because it will breach the trust deed limitation of 9.8% for individual shareholding. So the banker or the sponsor cannot undertake unsubscribed excess rights which will mean an immediate violation of its own trust deed as well as US tax transparency rule for REIT holdings. Look at what happened to US Commercial Office REITs of MUST, KORE and PRIME on SGX which are unable to do rights issuance and you will understand why they have to do either a fire sales of assets during crisis and/or stop paying out distributions to save itself. 

2. Over Concentration Risk of Key Tenant Making Up 31.5% of Monthly Base Rent.

There is one major tenant, with only a triple B credit rating, which makes up a significant 31.5% overall in NTT Data Centre REIT monthly rental income. If there are defaults, a huge chunk of “stable” rental income distribution to unit-holders will be gone with the wind. Look at what happened to DigiCore REIT and one will understand the impact.

If we are to do an online search on the mysterious identity of this major automotive tenant, 2 names came up with BBB S&P credit rating, that is, either Tesla or General Motors. Both are not exactly in a good financial state if you know what I mean. 

3. Forex Risk- Most of the Assets Are Located in US.

4 out of the 6 injected properties are based in the US and this current data centre REIT is also priced in USD. This will mean a forex risk to SG investors. I am not exactly sure whether this is the right time to be vested in so much US assets especially with the crazy antics by Donald Trump. 

Parting Thoughts- Personal Views

Interestingly, the sponsor has highlighted the low 35% leverage ratio will help NTT Data Centre REIT expand in future. But as alluded to Point 1 above, NTT Data Centre REIT most likely is destined for private placements route  for future acquisition. The problem with such REIT structure is that it can only raise funds from existing unit-holders during good times. During crunch times, retail investors will be faced with severe dilution as the sponsor and management will have to turn to private investors to raise fundings. I thought that folks should look at Mapletree Industrial Trust or Keppel Data Centre REIT if they want to be vested in the data centre business.

Donald Trump Whacked Elon Musk- Tesla Ouch!

Donald Trump has threaten to take away EV subsidies after Elon Musk went berserk and wanted to start a new political party (The America Party) due to the Big Beautiful Tax Cut Bill. Consequently, Tesla dipped close to 6% during early trading. Analysts have mentioned that up to 40% of Tesla’s profit may be at stake if the regulatory ground shift under Donald Trump. Donald Trump has once again proved himself to be the King of Mayhem if he succeed in throwing the wrecking ball at Tesla and other Musk’s businesses. 

So why did Elon Musk supported Donald Trump with so much political donation in the first place? Haiz…..what a mess for the stock market.

Manulife US REIT and Things To Take Note for US Office REITs listed on SGX.

I used to hold all the US office REITs of Manulife US REIT ("MUST"), Keppel Pacific Oak REIT ("KORE") and Prime US REIT ("PRIME") listed on SGX. Post COVID, all 3 REITS imploded in varying degree due to the work from home trend. I have then sold off the weakest 2 commercial REIT of MUST and PRIME and allocated the funds to KORE which I thought held the strongest balance sheet relative to the other 2 to mitigate the risk of bankruptcy while waiting for the US office market recovery. I thought that Dividend Uncle's recent interview with the new MUST CEO and his analysis on it are quite interesting, do take a look at his post here.

(Please click here for thos who preferred the You Tube version)

1. MUST Debt Restructuring On Track

Basically, MUST selling off of properties are on track to meet the debt restructuring plan imposed by the bankers. The only tragic part is that Donald Trump's import tariff imposition led to sudden uncertainty in the business environment and led to a 19% discount to net book value of Peachtree office building but nevertheless, this is still higher than the current market price of US$0.161 per unit of MUST which is just a fraction of its net asset value per unit.

Nevertheless, the same storyline of huge potential upside of 100% to 200% for the 3 US Office REITs which are trading at record low to their net asset value per unit hid a a major issue that has often been neglected and forgotten which I will elaborate below.

2. My Beef with US Commercial Office SREITS  

The often forgotten issue is that during times of crisis, US Commercial Office SREITs are unable to tap onto its sponsors or existing unit-holders to raise much needed funds to survive the crisis.

The major hurdle is the problem of the complex holding structure designed to minimise withholding tax in the rental return to unit-holders. The sponsors are unable to underwrite the rights issue during crisis time as their own unit-holdings will exceed 9.8%- please see my previous post on the technicality here.

(i) So far, one of the solutions we seen during such crisis time is the selling off of office building at fire sales price for MUST and PRIME. KORE also announced in 2025 the sales of non-core assets. This is not exactly an ideal solution and as a matter of fact a really bad move. 

(ii) The other solution is private placement to 3rd parties at extremely dilutive pricing. MUST tried that but failed in the face of institutional investors protest at the grave dilution for existing unit-holders.

(iii) A 3rd fund raising solution will be as per what KORE has done- it has suspended all distribution to unit-holders from 2023 to 2025 and only resume pay-out in 2026 subject to improvement in US commercial office space conditions. The retained distributions is akin to a forced rights issue where everyone will need to contribute thus circumventing the issue of non-subscription which will cause breach of the  more than 9.8% individual threshold allowance. 

Parting Thoughts:

While current US office REITs seemed very much undervalued, my personal thoughts are that retail investors may seriously need to consider whether it is worth holding on to a ticking-time bomb (due to market cycle) or to consider an exit strategy once the price recovery plays out.