Mapletree Industrial Trust - CIMB Research 2017-03-06: Extends track record in build-to-suit data centres

Mapletree Industrial Trust - CIMB Research 2017-03-06: Extends track record in build-to-suit data centres MAPLETREE INDUSTRIAL TRUST ME8U.SI

Mapletree Industrial Trust - Extends track record in build-to-suit data centres

  • MINT will be developing a BTS data centre for an established data centre operator at a development cost of S$60m. Expected completion date is 2H18.
  • The development is in line with MINT’s focus on growing its hi-tech buildings segment. This project is set to bolster FY19F growth.
  • Maintain Add, with MINT one of our sector picks.



Extends track record in build-to-suit data centres

  • MINT will be developing a build-to-suit (BTS) data centre for an established data centre operator (a new client) at an estimated development cost of S$60m. We believe that the six-storey facility (GFA of 242,000 sq ft) will be located at the Singapore Data Centre Park in Jurong, with a land tenure of 30 years. The expected completion date is 2H18.
  • Similar to the BTS data centre at 26A Ayer Rajah Crescent (for Equinix), the lease will be shell & core, although MINT will have to incur land rent, which is billed annually. The initial lease term is around 10 years with staggered rental escalations.
  • Beyond that, guidance is light (owing to client confidentiality) and we defer contributions from this project until more details are available.
  • Nonetheless, this project is set to bolster FY19F growth, which will also see stabilised contributions from the BTS for Hewlett-Packard from Dec 18 onwards and initial contributions from the new hi-tech building at Kallang Basin 4 cluster.
  • We recall that NPI yield for the BTS at 26A Ayer Rajah Crescent is 7-7.5%. However, with the market environment more competitive, we think that there could be some yield compression.
  • We expect the S$60m capex to be debt-funded and billed upon milestone completion.


Strategy unchanged: focus on hi-tech buildings

  • The development is in line with MINT’s focus on growing its hi-tech building segment.
  • Within this segment, MINT sees secular demand for data centres. This development will also allow MINT to better understand industry dynamics and different clients’ requirements for data centres.
  • This will be the fourth data centre in MINT’s portfolio, which includes Tata Communications Exchange at Paya Lebar iPark, 26A Ayer Rajah Crescent for Equinix and 19 Tai Seng Drive for Star Hub.


Maintain Add with MINT one of our sector picks

  • We maintain Add with MINT one of our sector picks. Given the BTS for HewlettPackard and the asset enhancement initiative at Kallang Basin 4, we forecast MINT to deliver a 3-year DPU CAGR of 2.7% through FY16-19F, one of the highest in the sector. 
  • Our DDM-based target price remains S$1.68. 
  • Downside risks could come from downward pressure on occupancy and rental rates.




YEO Zhi Bin CIMB Research | LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-03-06
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 1.680 Same 1.680



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