Mapletree Industrial Trust's third data-centre BTS. (Photo: Mapletree Industrial Trust)Mapletree Industrial Trust's third data-centre BTS. (Photo: Mapletree Industrial Trust)

OCBC Investment Research has reiterated a ‘Buy’ rating on Singapore-listed industrial REIT, Mapletree Industrial Trust, and revised its fair value estimate upwards, citing the built-to-suit (BTS) data-centre development contract that was announced in early-March 2017.

Given the project’s estimated total cost of development of SGD60 million (USD43 million), OCBC projects the net property income (NPI) yield-on-cost to be 6.5%.

“We are positive on this deal, as the property will be fully leased to the client for an initial lease term of more than ten years, and the structure of the lease includes staggered rental escalations and renewal options”, said OCBC, adding that the project will enhance income stability and visibility.

The REIT’s increasing focus on the high-tech industrial building segment, and inclination towards providing customised industrial real estate solutions to clients, is also seen as a scaling up on the value chain.

As such, OCBC has revised its fair value estimate on the REIT to SGD1.88, up from SGD1.79 previously.

Units of Mapletree Industrial Trust are currently trading on the Singapore Exchange at SGD1.755.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.