Lai and Tan have a target price of US$1.20 ($1.57) on NTT DC REIT, 20% above its IPO price of US$1. Units in NTT DC REIT sank to a low of 92 US cents in August, before climbing in mid-September. After notching a high of US$1.06 in October, NTT DC REIT units have returned to US$1 as at Nov 4.
DBS Group Research analysts Dale Lai and Derek Tan have initiated coverage on data centre play NTT DC REIT with a “buy” call, four months after it listed on the Singapore Exchange as the largest Mainboard debut in a decade.
The DBS analysts see an opportunity for NTT DC REIT to optimise portfolio occupancy as tenants ramp-up utilisation. They also like that the REIT has 78% of leases on fixed annual rental escalations or Consumer Price Index-linked escalations, and that the REIT has a right of first refusal (Rofr) pipeline from its sponsor with an IT load of some 2,000 megawatts (MW).
