Top 2 Data Centre REITs on SGX to Ride the AI and Data Centre Boom

December 1, 2023

Data centre REIT Singapore

In the Singapore’s stock market landscape, Real Estate Investment Trusts (REITs) specializing in data centres are becoming increasingly prominent.

Driven by the explosive growth in artificial intelligence (AI) and the escalating need for data storage, these REITs are essential in supporting the vast demands of cloud computing and AI technologies.

Among them, two REITs stand out for their potential to ride the wave of data centre growth:

1. Keppel DC REIT (SGX: AJBU)

As Asia’s first pure-play data centre REIT, Keppel DC REIT has established a strong foothold in the digital infrastructure domain. Its expansive portfolio, spanning key markets in Asia and Europe, positions it as an ideal candidate for investors seeking focused investment in data centres.

2. Mapletree Industrial Trust (SGX: ME8U)

Originally encompassing a broader industrial spectrum, MIT has strategically shifted its focus toward data centres. This move, highlighted by significant acquisitions in the United States and Japan, aligns MIT with the growing digital infrastructure demand.

Analysis of the Top Data Centre REITs:

Keppel DC REIT: It boasts a robust portfolio of 23 data centres across nine countries and an impressive occupancy rate of 98.3%. Despite rising costs and interest rates, the REIT has demonstrated resilience with stable revenue growth and prudent debt management, making it an attractive option for long-term growth.

Mapletree Industrial Trust: MIT’s increasing focus on data centres is evident in its recent strategic acquisitions. Coupled with a high occupancy rate of 93.2% and a strong debt profile, MIT offers a balance of stability and growth in the data centre sector.

Other Notable Data Centre REITs

Aside from Keppel DC REIT and MIT, other REITs in Singapore also have exposure in the data centre industry.

CapitaLand Ascendas REIT (SGX: A17U): Known for its diversified portfolio, it includes data centres along with logistics spaces, industrial properties, and high-tech parks. However, data centers constitute about 9% of its portfolio, compared to MIT’s 56%.

CapitaLand China Trust REIT (SGX: AU8U): With a focus on retail and office spaces in China, this REIT’s expansion into data centres and logistics centres diversifies its portfolio and taps into the digital economy of China.

Digital Core REIT (SGX: DCRU): A pure-play data centre REIT, Digital Core REIT is positioned for growth in digital infrastructure. However, share price has been on a downtrend mainly due to the bankruptcy that was filed by its second major customer. It has managed to resolve the lingering issue through a series of transactions, including selling two data centres in Silicon Valley to Brookfield Infrastructure Partners for US$160 million.

Keppel DC REIT and MIT top picks for tapping into data centre growth

Keppel DC REIT and Mapletree Industrial Trust emerge as top picks for S-REITs with data centre exposure, offering investors opportunities to capitalise on the digital revolution.

Their distinct approaches – Keppel DC’s specialised focus and MIT’s balanced expansion – provide diverse pathways for investment.

However, investors should consider their personal investment goals, risk tolerance, and market outlook before making decisions.

For example, CapitaLand Ascendas REIT’s broader diversification might be more appealing to investors seeking exposure across various industrial and commercial real estate sectors, not just data centres.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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