SINGAPORE (Sept 19): Mapletree Industrial Trust (MINT) is poised to up its stability and growth following its acquisition of a US$1.37 billion ($1.88 billion) data centre portfolio in North America, says Maybank Kim Eng Research.
MINT and sponsor Mapletree Investments, which is wholly-own by Temasek Holdings, announced earlier this week that they are jointly acquiring 10 powered-shell data centres in the US and Canada from Digital Realty, as well as co-investing in three existing fully-fitted hyper-scale data centres.
MINT’s contribution to the total deal value is US$694.5 million.
See: Mapletree Industrial Trust and Mapletree Investments to acquire US$1.4 bil data centre portfolio in North America
Already, the REIT has raised nearly $400 million in an upsized private placement of a total of 176.6 million new units at $2.265 each – the top of the issue price range – to help fund the acquisition.
The proposed acquisition is expected to be distribution per unit accretive to unitholders.
See: Mapletree Industrial Trust raises $400 mil in private placement to help fund new acquisition
Market watchers believe MINT has gained hi-tech growth momentum from the acquisition – its second overseas deal.
According to analyst Chua Su Tye, the acquisition will lift MINT’s freehold properties from 24.0% to 37.9% of its assets under management (AUM), as well as increase the REIT’s DPU visibility.
“We estimate DPUs could rise 3.0% in FY21, as its hi-tech AUM contribution grows from 43.5% to 52.9%,” Chua says in a report on Sept 17.
“We favour MINT for its growth fundamentals, as DPUs are supported by recovering leasing demand in Singapore and a more resilient portfolio given its hi-tech asset investments and overseas diversification,” he adds.
Maybank is keeping its “buy” call on MINT, and raising its target price by 4.2% to $2.50.
The third-largest industrial sector S-REIT, MINT has also recently completed asset enhancement initiatives and has several ongoing redevelopment works.
These include the build-to-suit (BTS) for Hewlett-Packard, 30A Kallang Place, Sunview Way BTS data centre, and 7 Tai Seng Drive.
Taken together, Chua believes these should support DPU CAGR from FY20-22E.
In addition, the analyst notes that MINT has a strong balance sheet relative to its peers, with aggregate leverage at 33.4% as of end-June.
According to Chua, this translates into an estimated debt headroom of up to $1.2 billion for deal opportunities.
“We forecast business parks and high-specs buildings to generate 53% of MINT’s NPI in FY22E, up from 41% in FY18,” Chua adds.
As at 11.32am on Thursday, units in MINT are trading 3 cents higher, or up 1.3%, at $2.43. This implies an estimated price-to-book value (P/BV) ratio of 1.5 times and a dividend yield of 5.3% for FY19E.
