In his Apr 19 report, Lee notes that CLINT has underperformed S-REITs year-to-date. He attributes the underperformance to higher debt cost and potential capital-raising requirements as a result of sizable acquisitions and developments announced in FY2022.

“We forecast about $400 million per year capital requirements in FY2023 to FY2025 and $200 million in FY2023 from acquisitions of International Tech Park Pune – Hinjewadi (ITTP-H), which will likely be funded via a combination of existing cash of $167 million, incremental debt, retained distributions and equity,” says Lee.

He also estimates funding needs of $160 million per year in FY2023 to FY2025 from seven ongoing fund-through projects.

CLINT currently has a portfolio of three data centres in Navi Mumbai, Hyderabad and Chennai, with total power load of about 150 megawatt which will begin construction in FY2023 and complete in 4QFY2024 to 4QFY2025.

Another data centre in Bangalore is expected to commence construction in 4QFY2023, which will bring its data centre exposure to over 20% of its assets under management, according to Citi’s estimates.

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“We believe this would enable CLINT to capture the increase in data usage from government-led digitalisation initiatives, 5G adoption and migration of captive data centre capacity to colocation facilities. We estimate about $250 million per year of capital expenditure, which could be reduced if tenants are hyperscalers,” says Lee.

Meanwhile, CLINT has also entered into a non-binding term sheet with the real estate arm of Indian conglomerate Larsen & Toubro, L&T Realty, to develop close to 6 million  sq ft of prime office spaces across Bengaluru, Chennai and Mumbai. CLINT will market the development, eventually acquiring them in phases from 2H2024 to 2026, Lee notes.

Citi has reduced its FY2023/FY2024 DPU estimates for CLINT by 12.7% and 18% respectively on higher debt cost mitigated by acquisition of ITTP-H as well as completion of ongoing development projects.

Units in CLINT closed 1 cent lower or 0.91% down on Apr 20 at $1.08.

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