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Mapletree Industrial Trust vs Mapletree Logistics Trust: Which is the better REIT?

By Gerald Wong, CFA • 29 Mar 2024 • 0 min read

We compare two popular industrial REITs to find out what may be driving the difference in their dividends and share price performance.

mapletree industrial trust vs mapletree logistics trust share price.jpg

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What happened?

Earlier, we shared that Mapletree Logistics Trust is one of the six Singapore REITs that raised its dividends in 2023

However, Mapletree Logistics Trust’s share price has not performed as well, declining by close to 15% year-to-date to reach S$1.46 as of 28 March 2024. 

mapletree logistics trust share price march 2024

On the other hand, Mapletree Industrial Trust was one best performing REITs in 2023, even as its dividends declined in the past year.

This would make Mapletree Industrial Trust one of the more resilient Singapore REITs, joining CapitaLand Ascendas REIT in posting positive share price performance in the past year despite industry headwinds. 

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This led some investors in the Beansprout community to ask if we could compare Mapletree Industrial Trust and Mapletree Logistics Trust to find out which is the better industrial REIT. 

With both REITs having the same sponsor and belonging to the same property sub-sector (i.e. industrial), it can be a tough choice for investors to select between the two.

We compare each REIT based on its financial and operating metrics to give you a clearer picture of which may be a better investment choice.

Comparing Mapletree Industrial Trust with Mapletree Logistics Trust 

Mapletree Industrial Trust (MINT) was listed back in 2010 and has a portfolio comprising light industrial buildings, business parks, and data centres.

Mapletree Logistics Trust (MLT) has been listed since 2005 and as its name suggests, owns a portfolio of logistics properties.

Both REITs are anchored by a reputable sponsor in Mapletree Investments Pte Ltd, a real estate giant that owns and manages S$77.4 billion of properties as of 31 March 2023.

#1 – Portfolio composition

Portfolio Composition As of 31 December 2023MLTMINT
No. of Properties187142
No. of Countries83
AUM (S$ Billion)13.39.2
Source: MINT and MLT Press Releases and Presentation Slides 

 

First, we look at each REIT’s portfolio and what it comprises.

MLT’s portfolio consists of 187 logistics properties that are spread out across eight countries such as Singapore, China, Japan, and South Korea.

MINT, on the other hand, owns a more diverse set of 142 properties but these are concentrated in just three countries – Singapore (85), the US (56) and Japan (1).

More than half of its assets under management (AUM) are data centres while the rest comprise light industrial buildings, business parks, and hi-tech buildings.

MLT has 906 tenants within its properties while MINT has more than 2,000, making both REITs suitably diversified.

Investors may prefer MLT as it has a larger AUM of S$13.3 billion compared to MINT’s S$9.2 billion which is spread across eight countries.

MINT is mainly focused on two countries – Singapore and the US, and has a large concentration of data centres.

#2 – Operating metrics

Operating Metrics As of 31 December 2023MLTMINT
Occupancy Rate95.9%92.6%
Weighted Average Lease Expiry (Years)2.94.4
Rental Reversion Rate3.8%7.2%
Source: MINT and MLT Press Releases and Presentation Slides

 

Moving on to each REIT’s operating metrics, it was a mixed bag for both MLT and MINT.

MLT boasted a higher occupancy rate at close to 96% compared with MINT’s 92.6%.However, MINT enjoyed a longer weighted average lease expiry (WALE) of 4.4 years which provides better rental income certainty.

Also, MINT’s rental reversion rate hit 7.2% which was nearly double that of MLT’s portfolio.

This is a tough category to decide which REIT is better in and investors will have to decide which metric(s) is/are more important in their decision-making process.

 

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#3 – Capital recycling initiatives

Both MINT and MLT are active in asset enhancement initiatives (AEI) and capital recycling to better manage their portfolios. 

MINT had recently completed the redevelopment of its Mapletree Hi-Tech Park @ Kallang Way with committed occupancy at 51.3%.

The industrial REIT also announced the completion of the acquisition of an Osaka data centre back in September last year.

MLT’s manager has been active in acquisitions and capital recycling.

In the most recent quarter, it completed two acquisitions, one in Singapore and the other in Malaysia, which were both above their valuations.

The logistics REIT also announced two divestments along with an acquisition which will be completed in subsequent quarters.

MLT has an ongoing asset redevelopment project at 51 Benoi Road in Singapore to more than double the property’s gross floor area.

#4 – Debt profile

Debt Ratios As of 31 December 2023MLTMINT
Gearing Ratio38.8%38.6%
Interest Coverage Ratio (times)3.74.7
Weighted Average Cost of Debt2.5%3.1%
% of debt on fixed rates83.0%79.5%
Source: MINT and MLT Press Releases and Presentation Slides

 

Debt is an important aspect of any REIT as the asset class relies on borrowings to fund operations, acquisitions, and asset enhancement initiatives (AEIs).

Looking at each REIT’s debt metrics, both MLT and MINT have a fairly similar level of gearing.

MINT, however, enjoyed a higher interest coverage ratio but sported a higher cost of debt at 3.1%.

MLT managed to keep its cost of debt low at just 2.5% and it also hedged a larger portion (83%) of its debt to fixed rates compared with MINT’s 79.5%.

Investors are likely to prefer MLT to MINT as the former has a lower overall cost of debt with a better buffer against rising interest rates.

#5 – Financial performance

Financials and DPU 9 months ending 31 December 2023MLTMINT
Gross Revenue year-on-year % change0.2%0.9%
Net Property Income year-on-year % change-0.2%0.1%
DPU Year-on-year % change0.7%-1.7%
 Source: MINT and MLT Press Releases and Presentation Slides

 

Moving on to each REIT’s financial performance, MINT did better than MLT in growing its gross revenue.

MINT registered a 0.9% year on year increase while MLT only managed a meagre 0.2% year on year improvement.

MLT saw its net property income dip slightly year on year while MINT eked out a tiny 0.1% year-on-year increase.

Distribution per unit (DPU), however, painted a different picture.

MLT squeezed out a small 0.7% year on year rise in its DPU while MINT saw its DPU fall by 1.7% year on year because of higher finance costs and a larger base of units.

#6 – Distribution yield

Distribution Yield Fiscal Year Ending 31 March 2023MLTMINT
DPU (S$) - Trailing 12-month0.09060.134
Share Price S$ (28 March 2024)1.462.34
Trailing 12-month Dividend Yield6.2%5.7%
Source: MINT and MLT Press Releases and Presentation Slides

 

Finally, we arrive at the arguably most important financial metric of all – each REIT’s distribution yield.

MLT sported a higher trailing distribution yield of 6.2% compared with MINT’s 5.7%, making it the clear winner in this category.

Coupled with a year-on-year DPU increase which we demonstrated earlier, investors should view MLT favourably as it possesses a high yield and managed to continue growing its DPU.

Find out how much dividends you would have received as a shareholder of Mapletree Logistics Trust in the past 12 months with the calculator below.  

Find out how much dividends you would have received as a shareholder of Mapletree Industrial Trust in the past 12 months with the calculator below.  

What would Beansprout do?

Choosing between two well-managed REITs with high-quality portfolios is not an easy task.

In deciding between Mapletree Industrial Trust and Mapletree Logistics Trust, we would look at their operational metrics, balance sheet strength and dividend yield. 

Based on the comparison above, MLT appears to have a more diversified portfolio of assets with a higher occupancy rate, lower borrowing cost, as well as a higher dividend yield. 

Hence, we would start with doing more due diligence on MLT if we are choosing between the two REITs. 

However, for investors looking at REITs to ride on growing data centre demand, MINT would offer more exposure compared to MLT. 

To learn more about how to choose the best REIT for your portfolio, you check out our complete guide to Singapore REITs.

Check out our REIT comparison tool to find the best REIT for your portfolio. 

Related Links:

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Download our Beansprout REIT Investment Guide!
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This article was first published on 29 March 2024 .

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