SINGAPORE (July 2): With data centres increasingly emerging as crucial infrastructure in a digital economy, Mapletree Industrial Trust (MIT) is shaping up to be an increasingly lucrative data centre play with the acquisition of a 60% stake in 14 US data centres. With this likely to be a key earning driver in 2HFY21, DBS’s Derek Tan and Dale Lai have issued a “buy” call with a target price of $2.90 and a 12% upside. 

This portfolio of data centres was jointly acquired by MIT (40%) and its sponsor Mapletree Investments back in 2017 during their first foray into the data centre space. The purchase consideration for the stake is for US$210.9 million ($299.5 million) for a property value of US$494 million. This is in line with the latest valuation from Cushman and Wakefield and a 0.7% discount to the latest independent valuation by Newmark Knight Frank Valuation & Advisory LLC as at 31 May 2020.

MIT’s equity fund raising (EFR) for the acquisition has met with a strong response -- it has raised $410 million from a recent private placement exercise to existing and new shareholders, exceeding its initial target of $350 million. Placement price came in at $2.80 per unit, a figure at the top-end of the indicative deal range and a 1.6% discount relative to adjusted VWAP. Excess funds not used to acquire the data centres will be used to strengthen the REIT’s gearing ratio. 

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