SINGAPORE (June 12): DBS is maintaining its “buy” call on Mapletree Industrial Trust (MINT) with a target price of $1.94.
This follows the divestment of 65 Tech Park Crescent to Concrete Innovators for $17.7 million.
The property is a three-storey Light Industrial Building with a total GFA of 107,373 sf and a remaining land lease tenure of 36 years.
The consideration is at a slight premium over the latest valuation of $17.6 million, but 34% above its purchase price back in 2010 of $13.2 million.
In a Friday report, analyst Derek Tan expects MINT to see efficiency loss and downtime upon the expiry of the master lease this coming November as a result of subdued leasing demand for the property based on the current configuration.
Hence, divestment of this property is the “most optimal strategy” for MINT to realise value for its shareholders, adds Tan.
In addition, the property only forms about 1.3% of MINT’s portfolio and therefore will have minimal impact on its DPU.
The proceeds from the sale will either be used for investments, debt reduction or be returned to shareholders.
“While impact on the REIT is small, we believe that the manager’s pro-active strategies to optimise returns through selective redevelopment and asset divestments will be well received by investors,” says Tan.
Units of MINT are trading at $1.83.
