1 Singapore REIT That FIRE Investors Should Buy

July 6, 2021

When you’re thinking about investing for financial independence, the reliability of dividends, or distributions, from stocks and real estate investment trusts (REITs) is a high priority.

For those of us keen on the “financial independence, retire early” (FIRE) movement, we generally want to be invested in names that can deliver passive income on a regular basis without raising any doubts.

That way, we can count on all the money we’ve invested to keep working for us, night or day.

In Singapore, given the higher costs of living and cost inflation of services (such as healthcare), the growth of this passive income is crucial.

That’s why this one Singapore REIT which has been paying consistent dividends for years and, which I believe will continue to do so for years to come, is perfect for anyone looking to put money to work in pursuit of FIRE.

Reliable income stream

Mapletree Logistics Trust (SGX: M44U), or MLT, is an Asia-focused logistics REIT that first listed in Singapore back in 2005.

It has a sizeable portfolio of 163 properties across Singapore, Hong Kong, Japan, China, Australia, South Korea, Malaysia, Vietnam and India, as of the end of March 2021.

MLT’s sponsor is Mapletree Investments Pte, a leading real estate, investment and property management firm that owns and manages S$66.3 billion worth of properties across the office, retail, logistics, industrial, data centre, residential and corporate housing sectors.

This strong parent company has allowed MLT to really grow both its income and distribution per unit (DPU) over the years.

As you can see in the table below, MLT has seen net property income surge from S$70 million in 2006 – its first full year as a listed firm – to S$499.1 million in FY18/19 (for the year ended 31 March 2021).

Meanwhile, its DPU has grown from 5.07 Singapore cents to 8.33 Singapore cents, delivering a compound annual growth rate (CAGR) of 3.6% in its DPU over the past 14 years.

Over the past decade, MLT is one of the best-performing REITs from the Straits Times Index, having given investors a total return of 313% over that period.

Mapletree Logistics Trust financials

Source: Mapletree Logistics Trust investor relations. *FY11/12 comprised five quarters ended 31 March 2012 due to a change in MLT’s financial year-end to 31 March.

Delivering growth

That CAGR of its DPU easily beats Singapore’s core inflation rate of 0.8% (as of May 2021). For those looking for rock-solid income, the reliability and sustainability of a dividend is of paramount importance.

In this respect, MLT possesses a solid track record over the years of continually increasing its DPU (bar just FY15/16 when it fell slightly).

Amazingly, the REIT even increased its DPU last year amid the Covid-19 pandemic as demand for warehouse space in Asia ballooned on the back of e-commerce and the work-from-home life.

According to JLL, a property consultancy, in 2020 US and European firms leased 16% and 21% more warehouse space, respectively, than the year before.

In Asia? That number was 32%. Given the relatively low penetration rate of e-commerce in the region, versus more developed markets, warehouse demand likely has a long runway to keep expanding in Asia.

In that vein, MLT was a big acquirer of logistics assets last year. It spent a total of S$1.6 billion on 18 modern facilities in Australia, China, Vietnam, Japan, South Korea and India, as well as buying the remaining 50% interest in 15 properties in China.

Quality for the long term

Overall, MLT offers investors who are thinking about reaching FIRE with an ideal platform for both reliable income as well as growth in that income.

The second point is crucial as ensuring the expansion of payouts will mean FIRE investors can outpace inflationary costs in Singapore.

The need for warehousing space in China (itself a huge domestic consumer market) and the rest of Asia will only continue to grow.

At the moment, MLT is trading at a unit price of $2.10 giving it a distribution yield of 4.0% on a trailing 12-month basis.

Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Mapletree Logistics Trust.

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.

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