Firstly, MINT is divesting its Philadelphia Data Centre at 2000 Kubach Road, which has been vacant since end of 2024, for US$14.5 million, as part of its proactive capital recycling strategy.
The sale, at a 4.3% premium to last valuation, is in Tan's view a "constructive" move that allows MINT to monetise a smaller and non-core asset while redeploying capital towards repayment of debt.
Next, MINT is starting to see the fruits of its active pro-leasing efforts in the US.
Ahead of a lease expiry in 1QFY2027, MINT secured a replacement tenant for 2301 West 120th Street, Hawthorne on a ten-year term with annual escalations, while also locking in a five-year extension at 1400 Kifer Road, Sunnyvale, also with annual escalations.
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"This should help reduce vacancy drag and improve income visibility after earlier lease non-renewals," says Tan.
In his view, investors have yet to fully appreciate the active management of MINT’s US portfolio through the divestment of non-core assets, alongside ongoing efforts to de-risk the REIT’s cashflow profile via proactive asset management initiatives.
Key overhangs heading into FY2027 remain, namely, the lease expiry of larger assets of AT&T San Diego and 1001 Windward Concourse. These two properties alone account for 4% of MINT's portfolio revenue.
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The replacement tenant secured for Hawthorne supports Tan's view that operational headwinds could begin moderating over the coming quarters, although there are some reservations.
"Investors remain justifiably cautious over the prospect of continued DPU declines in the near term, and we believe MINT may be approaching a gradual bottoming phase," says Tan.
Meanwhile, with MINT's valuation appears "undemanding", given how it is trading just 1.14x P/B and a yield spread of close to 4.1% — levels that are near 5-year troughs for valuations and near cyclical highs for implied yields.
Mapletree Industrial units closed at $1.94 on May 26, down 0.51% for the day.
