MIT – DBSV

Winning a sweet deal

• ‘Built-to-suit’ project with quality earnings
  
• Good returns with accretion to distributions
  
• HOLD, TPS$ 1.46
  

Built-to-suit project for Equinix Singapore.Mapletree Industrial Trust (MINT) announced an agreement to develop a ‘built-to-suit’ facility for Equinix Singapore, a 7 storey, high specification property located in One-North (land allocated by JTC) which will primarily be used as a data centre. On completion, Equinix will sign a long term lease of 20 years with step-ups and further renewal options. Equinix have an option to enhance and add

additional infrastructure at two floors of this proposed faclity where additional rent will be payable.

Good returns and accretion to distributions.We like this deal as (i) the long lease provides good income visibility for this proposed investment, with annual step-ups providing longer term organic growth (ii) high returns on cost of 7.75% (on estimated rent of S$2.0 psf pm ) for this property, which will be accretive to distributions and (iii) quality earnings backed by a blue chip tenant – Equinix Sinapore is a subsidiary of

NASDAQ-listed Equinix Inc. a global interconnection and data centre company.

Maintain HOLD, TP S$1.46.TP is adjusted to S$1.46 after this latest deal has been factored in. DPU estimates adjusted down by c1% in FY14F to reflect income vacuum during development, but expect a hike of c3% after. HOLD call is maintained, premised on a lack of upside.