MINT

MINT: will develop and lease a build-to-suit (BTS) facility for Equinix Singapore to be used as a data centre. Equinix is a US$10b mkt cap global interconnection and data centre company, routing >90% of the world’s internet traffic over 900 telco exchanges. The proposed BTS will be a 7-storey high spec building with 385k sf gfa. Equinix has committed to fully take up the entire devt and will lease the BTS with an initial tenure of 20 yrs with option to renew for two additional 5-yr terms. MINT will develop the base building at an est cost of $108m and the project is expected to be completed in 2H14. In addition, MINT has granted Equinix options to enhance two floors with additional infrastructure to support data centre activities. If the option is exercised, the est total cost will be $217m and additional rent would be payable. This is MINT’s second data centre devt after the completion of Tata Communications Exchange in 2010 and strengthens MINT’s foothold in this growing segment. This will also help lengthen its relatively short-lease expiry and boost medium term growth. Assuming the BTS is fully debt-funded, gearing is expected to head up progressively from the current 37.1% to 44% including committed capex. Deutsche estimates a 1.5% to 3.6% accretion to FY15/16e DPU depending on whether the infrastructure option is exercised. The house maintains at Buy with TP 1.50; likes MINT for its stable and attractive yield of 6.5% with potential upside from further efficiency gains through AEIs and selective devts.