Hi Folks, welcome back to Investment Income For Life. Over the weekend, I was looking at whether there are opportunities to accumulate some additional SREITs that are at a good discount and also dividend yield. From StocksCafe, I noticed that Keppel Data Centre REIT ("KDC") is showing a 6.24% distribution yield at price of S$2.12 per unit.. This seems like a good deal to me and I thought that the recent market price crash for SREITs is giving out some good opportunities.
1. Is the 6.24% Distribution Yield Valid?
Unfortunately not so. The StockCafe system takes into account the early distribution of dividend due to acquisition exercise during the year. Add this on to the system forecast based on historical reference, the system thus ended up with a 6.24% high distribution yield.
Based on the unit price of S$2.12 as at 25 September 2026, this translates to a distribution yield of s smaller 5.4% based on half year annualised of 1st half results of 5.714 cents.
Saying that NAV per unit as of 1H FY2026 is S$1.73 per unit. This is still a massive 1.29 times premium over the latest market trading price of KDC.
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| Extract from 1H2026 KDC Results as well as Previous FY 2. Good thing is Aggregate Leverage Ratio at only 34%. KDC has maintained a prudent borrowings of less than 40% over the past 5 years. Its latest half year result indicated an aggregate leverage ratio of only 34%. Parting Thoughts On 1 September 2026, KDC agreed to buy stakes in two Tokyo data centres, Tokyo Data Centre 4 and 5. While KDC appears to be on a growth path again with major acquisitions for the past few years, I think that it appears to be still over-priced. from its NAV per unit and also offered a relatively unattractive low distribution yield of only 5.4% (taking into account that US Fed has hiked interest rates again). Should KDC dropped below S$2 per unit, it maybe worth a re-look. |
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