Mapletree Industrial Trust (SGX: ME8U) and Mapletree Logistics Trust (SGX: M44U) are two of the largest real estate investment trusts in Singapore by virtue of their billion-dollar market capitalisations. REIT Market capitalisation (3 Feb 2016) Mapletree Industrial Trust S$2.7 billion Mapletree Logistics Trust S$2.3 billion Source: S&P Capital IQ The two REITs both happen to have Mapletree Investments Pte Ltd, an investment firm with links to Singapore’s government, as their sponsor. At first glance, many investors, myself included, see logistic properties as a type of industrial real estate. So, this got me thinking: What are the key differences between the…
Mapletree Industrial Trust (SGX: ME8U) and Mapletree Logistics Trust (SGX: M44U) are two of the largest real estate investment trusts in Singapore by virtue of their billion-dollar market capitalisations.
|REIT||Market capitalisation (3 Feb 2016)|
|Mapletree Industrial Trust||S$2.7 billion|
|Mapletree Logistics Trust||S$2.3 billion|
Source: S&P Capital IQ
The two REITs both happen to have Mapletree Investments Pte Ltd, an investment firm with links to Singapore’s government, as their sponsor.
At first glance, many investors, myself included, see logistic properties as a type of industrial real estate. So, this got me thinking: What are the key differences between the two REITs and why might Mapletree Investments list them separately instead of combining them as one mega-REIT?
Here are the three key differences investors need to know about the two REITs.
One major difference between the two REITs is their geographical focus. Mapletree Industrial Trust has 84 properties, all of which are located in Singapore. Mapletree Logistics Trust, on the other hand, has over 110 properties that are spread across eight regions, including Greater China, Japan, Australia, Singapore, South Korea and more.
Thus, investors have the option to invest in a Singapore-specific REIT or have a diversified portfolio across the Asia-Pacific region.
Mapletree Industrial Trust invests in five different types of industrial properties in Singapore and these categories are flatted factories, hi-tech buildings, business parks, stack-up/ramp-up buildings, and light industrial buildings.
As a logistics trust, Mapletree Logistics Trust’s portfolio consists only of logistics centres; its business would thus depend solely on the demand and supply dynamics of warehouses in the geographical markets it is in. This is different from Mapletree Industrial Trust, which is more diversified.
Mapletree Industrial Trust has a much shorter lease term for its tenants when compared to Mapletree Logistics Trust.
For instance, Mapletree Industrial Trust has nearly 80% of its leases (by gross rental income) expiring over the next few years till the year ended 31 March 2019. In contrast, Mapletree Logistics Trust only has 54% of its leases (by net lettable area) expiring over the same period.
The above is not a clear apples-to-apples comparison, but it can still give us a nice idea of how Mapletree Logistics Trust may have more stable and predictable rental income.
Although both Mapletree Industrial Trust and Mapletree Logistics Trust appear to be similar, there are some important differences between the two REITs that investors should grasp before making any investing decisions.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any units in the REITs mentioned above.