Their target price of US$1.20 ($1.57) is 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. Lai and Tan are the first to have formal coverage of this counter.
DBS Group Research analysts Dale Lai and Derek Tan have started 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 appreciate that the REIT has 78% of its 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 approximately 2,000 megawatts (MW).
