Better Buy: Mapletree Logistics Trust vs. Mapletree Industrial Trust

Singapore REITs yielding

Tim Phillips

March 17, 2022

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In times of uncertainty, long-term investors like to find comfort by buying dividend stocks. That’s because there are many reasons to like what dividend-paying stocks provide you with.

And when the world is witnessing war in Europe, multi-decade high inflation and the prospect of rising interest rates, then investors will inevitably seek shelter from the volatility via dividend stocks.

In Singapore, an attractive hub for dividend investors, one of the best options on offer are real estate investment trusts (REITs).

Investment exposure across many properties, combined with the regular dividend payouts, equates to sustainable and predictable income for investors who buy REITs.

With many of the biggest REITs in Singapore holding up well during the latest volatility, I thought it would be worth comparing two of the most popular Mapletree REITs.

So, when comparing Mapletree Logistics Trust (SGX: M44U) and Mapletree Industrial Trust (SGX: ME8U), which REIT is the better buy for investors who love their dividends?

DPU growth

As I’ve stated previously, it’s actually more critical to identify the growth of a REIT’s (or stock’s) dividend over time rather than focusing purely on the yield.

So let’s compare the two. Mapletree Logistics Trust – which own multiple logistics properties across the Asia-Pacific region – paid out a distribution per unit (DPU) of 6.69 Singapore cents in FY2011/2012.

This happened to be the year that Mapletree Logistics Trust reverted to a financial year (FY) that ended on 31 March so I’ve taken the most recent four quarters’ DPUs of what was a five-quarter FY2011/2012.

Fast-forward to today and Mapletree Logistics Trust paid out a DPU of 6.52 Singapore cents for the first three quarters of FY2021/2022.

If we extrapolate its most recent DPU of 2.185 Singapore cents out to the end of this fiscal year (31 March 2022) then the REIT will pay out DPU of 8.7 Singapore cents for the whole of FY21/22.

That equates to a compound annual growth rate (CAGR) of its dividend of 2.9% over the past 10 years.

Meanwhile, Mapletree Industrial Trust was only listed in late 2010 so its first full year of dividend payments was FY2011/2012. In that year it paid out a DPU of 8.41 Singapore cents.

Today, based on the first three quarter of its latest FY21/22 year, it paid out a DPU of 10.31 Singapore cents.

If we extrapolate Mapletree Industrial Trust’s most recent DPU of 3.49 Singapore cents out to the end of this fiscal year (31 March 2022) then the REIT will pay out a DPU of 13.8 Singapore cents for the whole of FY21/22.

That means the REIT saw a dividend that expanded at a CAGR of 5.1% over the past decade, easily beating Mapletree Logistics Trust.

Winner: Mapletree Industrial Trust

Geographic and asset diversification

If the war in Ukraine has taught us anything as investors, it’s that you should be properly diversified across countries and sectors.

In that sense, it’s worth looking at how diversified the two Mapletree REITs are. First off, there’s Mapletree Logistics REIT.

As of 31 December 2021, the logistics giant had 167 properties across nine countries and regions; Singapore, Japan, South Korea, Hong Kong, China, Malaysia, Vietnam, Australia, and India.

Meanwhile, during its latest quarter, Mapletree Logistics REIT saw its largest tenant contribute just 7.0% of its overall revenue (see below).

Mapletree Logistics Trust tenant concentration

Source: Mapletree Logistics Trust Q3 FY21/22 earnings presentation

In contrast, as of 31 December 2021 Mapletree Industrial Trust had 143 data centre and industrial properties across Singapore, the US and Canada.

On the tenant concentration front, it derived just 6.2% of its overall gross rental income from its largest tenant in its latest quarter.

In sum, Mapletree Logistics Trust has a better diversification profile given its breadth of exposure on a country level as well as the higher number of properties it owns.

Winner: Mapletree Logistics Trust

Total returns

Finally, as dividend investors, it’s important that we focus on total returns as this will allow us to better gauge our long-run returns, taking into account both share price appreciation and the dividend yield.

I’m going to take a look at both the 10-year and five-year total returns of both REITs. On these fronts, the results are mixed.

Over the past 10 years (as of 31 January 2022), Mapletree Industrial Trust delivered a total return of 316.8%. This was superior to Mapletree Logistics Trust’s 10-year total return of 251.3%.

On the other hand, Mapletree Logistics Trust’s five-year total return of 108.9% edged out Mapletree Industrial Trust’s total return of 97.0% over the same period.

However, more weight should be given to the long-run returns so Mapletree Industrial Trust wins this round.

Winner: Mapletree Industrial Trust

Data centre darling

While both Mapletree REITs are strong ones, Mapletree Industrial Trust has been one of the best, and (crucially) most consistent, total return performers in the Singapore REIT space over time.

Furthermore its superior DPU growth over the past decade, and its exposure to the fast-growing data centre sector in North America, gives investors a solid dividend-paying machine.

While I own both Mapletree Logistics Trust and Mapletree Industrial Trust, I believe the latter is the better buy for dividend investors over the long term.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares of Mapletree Logistics Trust and Mapletree Industrial Trust.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.