LIFETIME MEMBERSHIP For the longest time, I have been contemplating to invest in an S-REIT with special focus in data centres. Hence, I have been monitoring Keppel DC REIT and Mapletree Industrial Trust (MIT). Both counters are majority-owned by Temasek Holdings and listed in the Straits Times Index (STI). Between the two players, I feel that the growth potential for MIT share price is higher due to recent strategic moves by the management.
In 2019, the Singapore government imposed a moratorium on new data centres. Being a land scarce country, there is a lack of land to accommodate the rapidly growing demands for data centres. In addition, data centres consume huge amount of energy and require energy-efficient cooling systems. For these reasons, data centre players like Keppel DC REIT and Mapletree Industrial Trust look to overseas for data centre acquisitions.
Between the two S-REITs, it seems to me that MIT’s management decided to go on shopping spree. In September 2020, MIT completed the acquisition of the remaining 60.0% interest in 14 data centres located in the United States for about $293 million. And in March 2021, MIT completed the acquisition of a data centre in Virginia, United States for about $283 million. Then in May 2021, MIT announced the acquisition of 29 data centres in United States. The slew of acquisitions led to several round of equity fundraising, thereby weighing on the MIT share price for the past one year.
Notwithstanding the above, MIT share price had been pretty stable year-to-date, declining by a mere 2.43%. Question now is whether the recent mega acquisition of 29 data centres located in the United States will change the game for MIT share price. Given the massive total acquisition cost of $1.82 billion, it had better be. To fund the acquisition, the S-REIT launched yet another equity fund raising to raise proceeds of no less than $800 million.
Initially, I had concerns whether the huge equity fund raising would trash MIT share price. But my fears proved to be unfound as MIT share price remained resilient after the issuance of the new units. With this uncertainty addressed, let’s assess the long-term impact that the deal will have on MIT share price.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in MIT before. Whether MIT share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
MIT share price in whole new world
In terms of financial effects, the recent acquisition of the 20 data centres in US would [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]LIFETIME MEMBERSHIP
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