NTT DC REIT Singapore Public IPO opens at 9 pm today 7 Jul 2025, and will close at 12 pm on 10 July 2025 and is expected to commence trading on the SGX Mainboard at 2 pm on 14 July 2025.
Application of the IPO can be made via ATMs and internet banking websites of DBS (including POSB), OCBC and UOB or via banking apps of DBS and UOB.
NTT DC REIT, a Singapore-listed Real Estate Investment Trust (S-REIT), offers a compelling proposition for investors seeking stable income and exposure to the booming global data center market. It seeks to raise up to US$773 million, with an IPO price of US$1 per unit, or S$1.276 per unit. Backed by NTT Group—one of the largest data center providers globally – NTT DC REIT’s IPO introduces a globally diversified portfolio of high-quality data center assets across key markets in the U.S., Europe, and Asia-Pacific and is Singapore’s largest REIT IPO in more than a decade.
Furthermore, GIC has committed US$100.9 million to the offering, subscribing to 100.9 million units as a cornerstone investor. Other cornerstone investors include Hong Kong-based Viridian Asset Management, AM Squared, Pinpoint Asset Management, and the US-based Ghisallo Master Fund.
The IPO Portfolio consists of six state-of-the-art data centers with an aggregate IT load of 90.7 MW, appraised at approximately US$1.6 billion. These facilities span 41,000 square meters, with occupancy rates ranging between 90% and 97%. The assets are strategically distributed across:
- United States (67.4%) – Including three freehold facilities in Northern California and one in Ashburn, Northern Virginia—two of the world’s most critical hyperscale data center hubs. These assets exhibit strong rental reversion potential, with current rents significantly below market benchmarks.
- Europe (16.1%) – One freehold facility in Vienna, Austria, which bridges Western and Eastern Europe, also shows upside in rental pricing.
- Asia-Pacific (16.5%) – A leasehold facility in Singapore, the second-largest data center market in APAC, with a long-term land lease in place.
This geographic and customer mix (51% hyperscale, 49% colocation) supports resilient occupancy and diversified revenue streams. Six of its top ten customers are investment-grade rated, including large enterprises and hyperscalers, enhancing cash flow visibility.
Financial Strength and Capital Structure
NTT DC REIT’s gross revenue declined by 9.4% from US$197.2 million in FY23 to US$178.7 million in FY24, primarily due to a change in the anchor tenant at its CA1-3 data centers in California. This transition led to vacancy periods of up to six months and a gradual ramp-up in power usage by the new hyperscaler tenant starting October 2023, delaying full revenue realization. While the revenue drop was partially offset by higher tenant fit-out income and new colocation activity at the Vienna (VIE1) property, as well as lower utilities expenses due to reduced power consumption, the overall impact of the tenant transition was the main contributor to the year-on-year decline.
NTT DC REIT’s unaudited pro forma consolidated balance sheet (as of December 31, 2024) indicates:
- Total Assets: US$1.60 billion
- Net Assets Attributable to Unitholders: US$1.03 billion, All of these net assets are Data center properties, which are not liquid. In 2024, the company has US$ 9 million in cash.
- Gross Borrowings: Estimated at US$550.6 million
- Aggregate Leverage: Estimated to be well below the regulatory ceiling of 50%, providing ample headroom for future acquisitions.
- 70% of NTT DC REIT’s borrowings are fixed rates or hedged-to-fixed rates. This provides financial stability amidst macro uncertainty.
- Forecast: The company forecasts it will still be in losses until 2027.
NTT DC REIT’s Initial Public Offering (IPO) Portfolio showcases a robust operating performance underpinned by high occupancy levels and a well-distributed lease expiry profile. As of 31 December 2024, the IPO Portfolio achieved a commendable occupancy rate of 94.3% and a Weighted Average Lease Expiry (WALE) of 4.8 years, measured based on monthly base rent. The occupancy rate is defined specifically as the ratio of contracted IT load to total design IT load, a metric commonly used to reflect utilization efficiency in data centre operations.
Overall Portfolio Performance
The REIT’s portfolio strategy emphasizes stability and predictability of income, supported by a healthy mix of hyperscale and colocation tenants. A hallmark of the portfolio is its balanced lease expiry schedule, with no single financial year in the next five years expecting lease expiries exceeding 20% of monthly base rent. This mitigates renewal risk and provides visibility over near-term revenue streams. The exception lies in FY33/34, during which lease expiries are projected to reach approximately 31.5% of monthly base rent.
The REIT further benefits from a highly stable tenant base. Over the three years leading up to 31 December 2024, the average customer retention rate stood at an impressive 98.3%, underscoring the “stickiness” of its clientele. However, a potential headwind arises from a notice of termination for 638 kW of contracted IT load at the CA1 facility. If the termination becomes effective as of 31 December 2024, the overall portfolio occupancy would slightly decline to 93.6%, which is still impressive. The Manager is proactively seeking replacement tenants to offset this shortfall. Additionally, the Manager remains committed to maintaining above-market occupancy rates by actively managing lease renewals and minimizing vacancy periods across its portfolio.
Individual Property Performance (as of 31 December 2024)
Each asset within the IPO Portfolio contributes uniquely to its overall performance, with varying occupancy rates and WALE metrics:
- VA2 (Virginia, United States):
This asset holds an occupancy of 97.3% and a WALE of 4.7 years. It is anchored by two major tenants—a Fortune 500 software company and a Fortune 500 technology firm—providing strong credit backing and long-term income visibility. - CA1 (California, United States):
CA1 has an occupancy rate of 92.0% and a WALE of 2.9 years. Its anchor tenant is a Fortune 100 U.S. automotive company, whose lease runs until 2033. The aforementioned termination notice, if effected, would reduce CA1’s occupancy to 86.9%. - CA2 (California, United States):
Occupancy stands at 99.3% with a WALE of 8.1 years. It is also leased to a Fortune 100 U.S. automotive company with the lease expiring in 2033, contributing to the stability of the portfolio’s income stream. - CA3 (California, United States):
With an occupancy of 89.9% and a WALE of 5.2 years, CA3 is similarly anchored by a Fortune 100 U.S. automotive firm with a lease expiration in 2033, reinforcing long-term visibility. - VIE1 (Vienna, Austria):
This European asset is 91.6% occupied, with a WALE of 7.0 years. It is supported by a major Fortune 500 technology company as its largest tenant. - SG1 (Singapore):
The Singapore facility has a relatively lower occupancy of 90.0% and a shorter WALE of 0.9 years. This is largely due to its retail colocation focus and a one-year renewal contract structure, especially with NTT Singapore Pte. Ltd., a major tenant whose lease expires in FY24/25.
Forecasted Occupancy and Outlook
Looking ahead, the IPO Portfolio’s occupancy is projected to strengthen. For the Forecast Year 9M25/26 and Projection Year FY26/27, occupancy is expected to rise to 97.6% and 97.7%, respectively. Individual asset forecasts are also promising:
- CA1: 99.1%
- CA2 and CA3: 100.0%
- VA2: 97.3%
- VIE1: 91.6%
- SG1: 94.5% in FY25/26 and 96.1% in FY26/27
These improvements are attributed to the ramp-up of existing leases, commencement of new ones, and scheduled leasing activities to fill currently available capacity. Notably, while implied occupancy rates for CA2 and CA3 may exceed 100% based on forecasted financials, these figures are capped at 100% for illustrative purposes. This adjustment reflects the operational reality that tenants are unlikely to simultaneously draw their full contracted IT load, thereby mitigating risks related to overcapacity.
Favourable Industry Outlook
The global data center industry is experiencing exponential growth driven by AI, cloud adoption, and digital transformation:
- Commissioned power capacity: Set to more than double from 49.1 GW in 2024 to 101.9 GW by 2027 (CAGR: 27.5%).
- AI infrastructure: Growing at a staggering 77% CAGR from 2023–2027.
- Pricing tailwinds: Hyperscale and wholesale pricing expected to increase across all regions through 2027.
Data centers have outperformed other real estate sectors in total returns over recent years, underscoring their value as a structural growth asset class. With rising capital allocation – US$60 billion in 2023 alone, the sector remains one of the most attractive for long-term infrastructure capital. The demand continues to grow as vacancy drops to all time low in 2024.
NTT DC REIT is uniquely positioned to capitalize on this sectoral tailwind:
- Sponsor ROFR Pipeline: A robust pipeline of over 2,000 MW of IT capacity from NTT Group, with ~130 MW identified for near-term injection, giving the REIT a clear runway for doubling its portfolio size.
- Sponsor Capital Recycling: NTT Limited’s strategy of selling stabilised assets to the REIT finances new developments, creating a self-reinforcing growth loop.
- Operational Support: Access to NTT Group’s global platform and expertise mitigates operational risks and ensures continuity in property management.
While it may be a growth candidate, it may not be the best play for investors looking for a dividend play. NTT DC REIT does not guarantee specific dividend payouts but has outlined a clear distribution policy and long-term objective of providing regular and stable distributions. From listing until FY26/27, it intends to distribute 100% of its annual distributable income, and at least 90% thereafter, with payments made semi-annually in U.S. dollars. It has a forecasted annualised distribution yield of 7.50% for forecast Year 9M25/26. However, these distributions are subject to various factors such as rental income, the financial health of its property companies, tax regulations, and management fee arrangements.
We also made a comparison to the other data center operators in the region. Currently, its financials are not the strongest amongst them. Being a pure play data center operator may be an excellent growth candidate when everyone is chasing such investments. However, it lacks diversification, and the operations is very asset heavy.
Risks and Considerations
Despite the strong industrial tailwind, investors should be mindful of several risks:
- Customer Concentration: Top three customers account for nearly half of monthly base rent—non-renewal could materially impact revenues.
- Economic Exposure: Performance is tied to macroeconomic and real estate trends in key regions (U.S., Austria, Singapore).
- Sponsor Dependence: The REIT’s growth is closely tied to the Sponsor’s continued commitment and financial strength. Currently, NTT Group has a credit rating of A from S&P and A2 from Moody’s, suggesting strong financial resilience.
- Limited Diversification: As a single-industry REIT, it is fully exposed to trends and risks specific to data centers.
- Execution and Competition: As competition intensifies globally, especially from large-cap players, retaining tenants and securing prime acquisitions may prove more challenging. There is also possibility of overspending as warned by many industry professionals like Alibaba’s Joe Tsai.
Conclusion: Should You Invest?
NTT DC REIT offers an entry point into the high-growth global data center sector via an income-generating REIT structure. Its strong initial portfolio, blue-chip customer base, and visible growth pipeline backed by NTT Group position it as a credible long-term investment for income-focused and infrastructure-savvy investors.
However, we will not be investing in the REIT at this time, as the business is still operating at a loss. The high WALE average of 4.8 years provides insurance to occupancy, but we remain concerned about the free cash flow as it remains negative. For a REIT play, we prefer a profitable and strong cash flow generating candidate to provide assurance of sustained dividends payout.
That said, for investors seeking U.S. dollar-denominated income with long-term growth potential in the digital infrastructure space, NTT DC REIT’s IPO still represents a timely and strategic diversification in the portfolio. While we mentioned that cash flow is a concern, the business is still resilient with relative cheap sources of funding. It plans to fund current and future capital expenditure requirements by drawing down on a committed revolving credit facility of US$60.0 million, this is at a 1.2% margin per annum.
Many of its data centers just began operations, so the low cash flow generations were due to one-time-off big ticket spendings and relatively new operations of data centers. If you are willing to take the risk and are optimistic with future developments, then this is your chance to get a share of the future of the world!
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