Artificial intelligence, or AI, has been the buzzword since late 2022 when OpenAI released ChatGPT.
Trained on large language models, ChatGPT sparked a revolution in the way AI understands and responds to user inputs.
Termed generative AI, the sector has seen massive investments from the likes of trillion-dollar blue-chip technology companies such as Microsoft (NASDAQ: MSFT), Meta Platforms (NASDAQ: META), and Alphabet (NASDAQ: GOOGL).
More recently, US President Donald Trump announced the Stargate project which involves a US$500 billion investment to build AI infrastructure in the US.
Such infrastructure includes AI-ready data centres which are equipped to handle high levels of power consumption and data requirements.
With AI looking to be an enduring trend, here are four Singapore data centre REITs that can give you a front row seat to the action within this space.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT with a portfolio of 25 data centres across 10 countries.
The REIT’s assets under management (AUM) stood at approximately S$5 billion as of 31 December 2024.
For 2024, the REIT saw its gross revenue rise 10.3% year on year to S$310.3 million while its net property income (NPI) increased by 6.3% year on year to S$260.3 million.
Although finance costs increased by 6.2% year on year to S$51.5 million, this was more than offset by a 40.8% year-on-year surge in finance income arising from the REIT’s Australian Data Centre Note.
As a result, distribution per unit (DPU) inched up 0.7% year on year to S$0.09451.
Keppel DC REIT maintained a high portfolio occupancy of 97.2% with a long portfolio weighted average lease expiry (WALE) of 6.3 years by net lettable area.
Because of strong demand for data centres, the portfolio enjoyed a positive rental reversion of ~39% for 2024.
There could be more upside for the REIT’s DPU as it completed the acquisition of a 99.49% economic interest in two Singapore data centres.
With an aggregate leverage of 31.5% , the REIT still has adequate debt headroom to undertake more yield-accretive acquisitions.
Digital Core REIT (SGX: DCRU)
Digital Core REIT, or DCR, owns a portfolio of 10 data centres with an AUM of US$1.4 billion.
The REIT enjoyed a high portfolio occupancy of 93% as of 30 September 2024 with a long WALE of five years based on annualised rent.
DCR reported a mixed set of earnings for the first nine months of 2024 (9M 2024).
Revenue and NPI dipped by 9.7% and 11.3% year on year, respectively, to US$72 million and US$45.3 million.
However, distributable income increased by 9.7% year on year to US$34.5 million.
DCR had a gearing ratio of 34.8% with a debt headroom of around US$100 million before it hits the 40% gearing level.
The REIT has a strong sponsor in Digital Realty Trust (NYSE: DLR) which has a US$15 billion acquisition pipeline that can be injected into DCR in the future.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT with a portfolio of 56 properties in the US, 83 in Singapore, and two in Japan.
MIT’s AUM stood at S$9.2 billion as of 31 December 2024.
For the third quarter of fiscal 2025 (3Q FY2025), the industrial REIT reported a 2% year-on-year increase in gross revenue to S$177.3 million.
NPI improved by 2.6% year on year to S$133.2 million while DPU crept up 1.5% year on year to S$0.0341.
Close to 56% of MIT’s portfolio comprises data centres which are spread across the US, Japan, and Singapore.
Overall occupancy stood at 92.1% for 3Q FY2025 and the portfolio’s WALE by gross rental income was 4.5 years.
The portfolio’s weighted average rental reversion for renewal leases was 9.8%, signalling continued strong demand for the REIT’s properties.
MIT recently acquired a freehold property in Tokyo, Japan, with future redevelopment potential into a new data centre.
CapitaLand Ascendas REIT (SGX: A17U)
CapitaLand Ascendas REIT, or CLAR, is Singapore’s oldest industrial REIT.
CLAR’s portfolio AUM stood at S$16.8 billion as of 31 December 2024 and of this portfolio value, around 9% comprised data centres in both Singapore and the UK.
The REIT reported a commendable set of earnings for 2024 with gross revenue rising 2.9% year on year to S$1.5 billion.
NPI increased by 2.6% year on year to S$1.05 billion while DPU crept up 0.3% year on year to S$0.15205.
CLAR reported a healthy portfolio occupancy of 92.8% as of 31 December 2024 and saw positive rental reversion of 11.6% across its portfolio.
The manager completed two acquisitions last year worth S$248.2 million and divested four properties worth S$177 million in both Australia and Singapore.
The industrial REIT is also undertaking eight projects worth S$803.6 million that are undergoing development, redevelopment or refurbishment to improve the portfolio’s returns.
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Disclosure: Royston Yang owns shares of Keppel DC REIT, Meta Platforms, Alphabet, Digital Core REIT and Mapletree Industrial Trust.
