Unlock Higher Yields: 3 Data Centre REITs Set for Dividend Hikes This Year
Within the industrial sub-sector, the data centre space offers tantalising opportunities for investors.
The surge in digitalisation, along with higher demand for cloud computing services, has contributed to the growth of this asset class.
Income investors can gain exposure to data centres by purchasing REITs that are either pure-play data centre REITs or through REITs with data centres within their portfolios.
Here are three Singapore data centre REITs that look well-positioned for higher dividends this year.
CapitaLand Ascendas REIT, or CLAR, is Singapore's oldest industrial REIT. Its portfolio includes 226 properties spread across Singapore (65%), the US (12%), Australia (13%), and the UK/Europe (10%).
CLAR's total assets under management (AUM) stood at S$16.9 billion as of 31 March 2025, and around 8% of its AUM comprises data centres located in Singapore and the UK.
The industrial REIT reported a commendable set of earnings for 2024 despite the twin headwinds of inflation and high interest rates.
Gross revenue rose 2.9% year on year to S$1.52 billion while net property income (NPI) increased by 2.6% year on year to S$1.05 billion.
The REIT's distribution per unit (DPU) inched up 0.3% year on year to S$0.15205.
For the first quarter of 2025 (1Q 2025) business update, CLAR reported a positive rental reversion of 9% for 1Q 2025.
This was slightly lower than the prior year's positive rental reversion of 11.4%.
Overall, CLAR reported a positive rental reversion of 11% for its portfolio.
The REIT also has ongoing projects that are undergoing development, redevelopment or refurbishment to improve the quality of the portfolio.
These projects, costing a total of S$498.4 million, will be progressively completed from 3Q 2025 to 1Q 2028.
CLAR maintained a high portfolio occupancy of 91.5% as of 31 March 2025 with moderate gearing of 38.9%, allowing the REIT to continue acquiring yield-accretive properties using debt financing.
Keppel DC REIT is a data centre REIT with a portfolio of 24 data centres across 10 countries.
As of 31 March 2025, the REIT's total AUM stood at approximately S$4.9 billion.
Keppel DC REIT's 1Q 2025 results packed a punch as it was the only REIT to report a double-digit year-on-year increase in its DPU.
Gross revenue jumped 22.6% year on year to S$102.2 million while NPI shot up 24.1% year on year to S$88.1 million.
Finance income was boosted by its Australian data centre note, climbing 40.1% year on year to S$3.9 million.
DPU increased by 14.2% year on year to S$0.02503.
Keppel DC REIT maintained a high portfolio occupancy of 96.5% and also enjoyed a positive rental reversion of 7% for the quarter.
The manager plans to rely on acquisitions in the target markets of Japan, South Korea, and Europe as a driver of its AUM and DPU.
With aggregate leverage at just 30.2%, this leaves significant debt headroom for the data centre REIT to conduct yield-accretive acquisitions.
Management identified artificial intelligence (AI) as an enduring trend that should boost demand for data centres serving AI inference workloads.
With positive rental reversions and the continued strong demand for data centres, Keppel DC REIT should do well in the medium term.
Digital Core REIT, or DCR, is also a data centre REIT with a portfolio of 11 data centres spread across the US, Canada, Frankfurt (Germany), and Osaka (Japan).
The REIT's AUM stood at US$1.7 billion as of 31 December 2024.
DCR reported an encouraging set of financial results for 1Q 2025.
Revenue leapt nearly 80% year on year to US$44.2 million, largely because of acquisitions conducted in the past year.
NPI climbed 41.8% year on year to US$22.4 million while distributable income rose 9.9% year on year to US$11.7 million.
The REIT enjoyed a very high portfolio occupancy of 98%, and its assets are all of freehold tenure.
With aggregate leverage at 38%, DCR has debt headroom of around US$438 million before it hits the mandatory 50% gearing limit.
The REIT recently concluded the acquisition of a 20% stake in a second data centre from its sponsor, Digital Realty Trust (NYSE: DLR).
DCR also established a US$750 million medium-term note programme to reduce reliance on bank debt and to set the stage for faster growth.
The data centre REIT has a right-of-first-refusal over its sponsor's pipeline of assets worth US$15 billion.
These assets have a minimum occupancy of at least 90% and do not require any material asset enhancements within two years.
This healthy pipeline means that DCR could engage in more yield-accretive acquisitions in the months and years to come, helping to boost its DPU.
First-time investors: We've finally released our Beginner's Guide. Read it in an afternoon, follow the principles, pick an investing style and buy your first SGX stocks within the next few hours! Click here to download it for free.
Follow us on Facebook and Telegram for the latest investing news and analyses!
Disclosure: Royston Yang owns shares of Keppel DC REIT and Digital Core REIT.
The post Unlock Higher Yields: 3 Data Centre REITs Set for Dividend Hikes This Year appeared first on The Smart Investor.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 hours ago
- Yahoo
Play Weakness in Australia's Economy with Today's Top Commodity Trade
December Australian dollar futures (A6Z25) present a selling opportunity on more price weakness. See on the daily bar chart for the December Australian dollar futures that prices have started to trend down. See, too, at the bottom of the chart that the moving average convergence divergence (MACD) indicator is in a bearish posture as the blue MACD line has just crossed below the red trigger line. More News from Barchart Dollar Recovers as Stocks Falter Signs of Peace Progress in Ukraine Boosts the Euro and Weighs on the Dollar Dollar Falls as Trump Calls for Fed Governor Cook to Resign Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! Fundamentally, the U.S. economy is stronger and arguably in better shape than the Australian economy. The threat of additional U.S. tariffs on Australian goods is also a bearish element for the Aussie dollar. A move in the December Aussie dollar futures below chart support at .6436 would give the bears more power and it would also become a selling opportunity. The downside price objective would be .6100, or below. Technical resistance, for which to place a protective buy stop just above, is located at .6581. IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature. Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you. On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Yahoo
4 hours ago
- Yahoo
Are Wall Street Analysts Bullish on Federal Realty Stock?
Federal Realty Investment Trust (FRT), with a market cap of $8.3 billion, is a real estate company that owns, operates and redevelops high-quality retail-based properties located primarily in major coastal markets. The North Bethesda, Maryland-based company's retail properties are anchored by supermarkets, drugstores, or high-volume, value-oriented retailers, which provide essential 1consumer necessities. Shares of this retail REIT have underperformed the broader market over the past 52 weeks. FRT has declined 14.4% over this time frame, while the broader S&P 500 Index ($SPX) has gained 14.3%. Moreover, on a YTD basis, the stock is down 13.6%, compared to SPX's 9% rise. More News from Barchart As SoFi Launches International Money Transfer Services, How Should You Play SOFI Stock? This Cannabis Stock Just Transformed Into a Bitcoin Treasury Play. Should You Buy Shares Now? Profiting from Volatility: CRWV Long Straddle Trade Setup Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Narrowing the focus, FRT has also lagged behind the Real Estate Select Sector SPDR Fund's (XLRE) 1% uptick over the past 52 weeks and 2.5% return on a YTD basis. On Aug. 6, Federal Realty reported Q2 results that topped Wall Street expectations. Its funds from operations stood at $165.5 million, or $1.91 per share, beating the consensus estimate of $1.73 per share. Net income was $153.9 million, or $1.78 per share, while revenue came in at $311.5 million, slightly above forecasts of $310.7 million. The company projects full-year funds from operations in the range of $7.16 to $7.26 per share. Shares of the company declined marginally post the announcement. For the current fiscal year, ending in December, analysts expect FRT's FFO to grow 5.9% year over year to $7.17 per share. The company's FFO surprise history is mixed. It exceeded or met the consensus estimates in three of the last four quarters, while missing on another occasion. Among the 18 analysts covering the stock, the consensus rating is a 'Moderate Buy' which is based on nine 'Strong Buy,' one 'Moderate Buy,' and eight 'Hold' ratings. This configuration has been consistent for the past months. On Aug. 8, Evercore ISI analyst Steve Sakwa reaffirmed an 'Outperform' rating on Federal Realty Investment while slightly lowering the price target from $109 to $107, a 1.8% reduction. The mean price target of $107.50 represents an 11.2% premium from FRT's current price levels, while the Street-high price target of $115 suggests an upside potential of 18.9%. On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
7 hours ago
- Business Insider
Quantum Computing News: SoftBank Invests $2B in Intel, Microsoft Plans Quantum-Safe Future, Research Team Advances Quantum Portfolio Tools
Welcome to another weekly update on quantum computing. The sector continues to advance, with notable progress in finance, security, and hardware research. SoftBank Group (SFTBY) made a major investment in Intel (INTC), Microsoft (MSFT) outlined its quantum-safe roadmap, and a team in Sydney showed a new way to shrink qubit use. Each step adds to the picture of how quantum could change both tech and markets in the years ahead. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. SoftBank Group Invests $2 Billion in Intel We start with SoftBank Group (SFTBY), which has agreed to put $2 billion into Intel (INTC) at $23 per share. The deal adds to a long tie between the two firms and supports Intel's work in U.S. chip design and supply. SoftBank also holds stakes in Arm (ARM) and a wide range of AI and telecom assets, so this move fits its plan to back core tech. Intel says the cash will fund work in cloud, network, and device chips. Quantum Finance: Portfolios on 100 Qubits Next, we look at finance use cases. A research team referred to as Gabriele and colleagues tested quantum methods to build better portfolios. They used a model that looks at Conditional Value at Risk, which tracks deep losses rather than just averages. It's a quantum computing system running on IBM (IBM) hardware with more than 100 qubits, which showed results with a 0.49% error, far lower than classic tools. By mixing quantum circuits with local search, the study found faster and more accurate results. The work suggests that quantum could one day cut the time to build complex funds and handle more assets. Microsoft Builds Quantum-Safe Systems Moving on to Microsoft (MSFT), which outlined its Quantum Safe Program. The plan sets a timeline for moving its full stack to post-quantum cryptography by 2033, with first steps in 2029. The effort covers its cloud, Windows, and AI tools. It also works with U.S. and global groups on standards. Microsoft has already built support for new cryptographic codes into its SymCrypt library, which feeds Windows and Azure. The company says it wants its own systems and those of its partners to be ready for the shift before large-scale quantum machines arrive. Logic Gates on One Ion We finish with researchers at the University of Sydney and Q-CTRL, an Australian quantum computing company, who introduced a new way to cut qubit needs. They built a universal logic gate using two logical qubits stored in one trapped ion. The method uses the GKP error-correcting code and reduces the number of physical qubits needed. The team said this marks the first time such gates have worked in practice with this scheme. The work, published in Nature Physics, could make future hardware more efficient by lowering the overhead of error correction. We used the TipRanks' Comparison Tool to line up some of the top quantum stocks and other tickers mentioned in this piece. It's an easy way to see how they compare and get a feel for where the space might be going.
