Data centres remain in high demand for S-REITs, with Mapletree Industrial Trust proposing a nearly two-billion-dollar purchase last week.
We are positive on growing data centre exposure among S-REITs – it also affords more options for investors seeking exposure to this asset class.
The hunt for data centres continues among S-REITs, with MINT proposing a S$1.8bn purchase of 29 data centres in the US last week, following Ascendas REIT’s S$1bn European data centre portfolio acquisition earlier this year.
While MINT’s purchase price is not exactly cheap, it does reflect elevated investor appetite for data centres, leading to compressed yields.
DPU accretion aside, we like the proposed deal, which increases MINT’s data centre portfolio value to S$4.6bn upon completion, exceeding that of Singapore’s only pure-play data centre REIT, Keppel DC REIT (AUM: S$3bn).
MINT also aims to eventually increase its data centre exposure to two-thirds of overall AUM (from c. 54% post-transaction), by way of acquisitions.
We think adding more data centres, a beneficiary of digitalization and keen institutional investor demand, could justify higher multiples for the stock, which trades at 5% DY1 and 1.7x P/B,. We remain OW on MINT.