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Mapletree Industrial Trust (MIT) is poised to benefit from the upcoming completion of Hewlett Packard’s (HP) latest built-to-suit (BTS) property by end-2016/1H 2017, as the company is expected to consolidate part of its operations in Singapore to the new property.
According to media reports, HP currently occupies around 2.3 million sq ft of space across three locations in Singapore — Tuas, Alexandra Technopark and Depot Road. HP is said to be committing almost 20 years for the building, to boost operational efficiency as well as optimise its real estate footprint within the city-state, according to DBS as cited by a report by Singapore Business Review.
It noted that contribution from the HP facility will come in at an ideal time for MIT as the REIT is expected to face downside pressures to income considering the dwindling outlook for industrial property.
The facility’s contribution will also see MIT DPU increase by as much as seven percent by end-FY2019.
With this, DBS warns investors to re-enter on a pull back since the HP boost is largely priced in.
Meanwhile, DBS believes that Frasers Commercial Trust (FCOT) can still have a stable DPU profile and offer good yield even as it loses HP, which accounts for around 17 percent of its gross rental income, as tenant.
“Assuming an AEI, our base case of HP partially moving out of ATP and a tweak in the proportion of management fee units, FCOT should be able to maintain a flattish DPU profile but still offer an attractive forward yield of 7.5 percent which is above its mean yield of seven percent.”
Image: Artist’s impression of HP’s Built-to-suit facility. (Source: Mapletree Industrial Trust)
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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