A Mini-Tour of Singapore’s Industrial REITs

Credit: Axisadman

Singapore’s real estate investment trusts (REIT) comes in many flavours.

Industrial REITs is one sector which makes up the Singapore’s REIT industry. A recent report from bourse operator Singapore Exchange Limited (SGX: S68) highlighted five industrial REITs. There might be something to learn from that report.

From it, I picked out six quick notes you might want to know (data as of 3 May 2016, unless otherwise mentioned):

  1. There is diversity in size. The quintet includes Mapletree Logistics Trust (SGX: M44U) and Mapletree Industrial Trust (SGX: ME8U) which both weigh in at over $2.5 billion in market capitalization. The other three, namely AIMS AMP Capital Industrial REIT (SGX: O5RU), Cambridge Industrial Trust (SGX: J91U) and Viva Industrial Trust (SGX: T8B) have market caps below S$1 billion.   
  2. The five REITs have an average dividend yield of 7.9%. The highest yielding REIT is Viva Industrial Trust which has a trailing distribution yield of 8.9%. Both Mapletree REITs are holding up the rear with a distribution yield of 6.9%.
  3. Higher yield does not always mean higher returns. Cambridge Industrial Trust, which has a trailing distribution yield 8.2%, recorded a negative 22% return over the past three years. In contrast, Mapletree Industrial Trust recorded around 30% in returns over the same timeframe.  
  4. It’s worth taking a peek into the debt profile as well. The average aggregate leverage ratio is 35%. Notable, the Monetary Authority of Singapore (MAS) had revised the upper leverage limit to 45% last year. Mapletree Industrial Trust has the most headroom for debt with leverage ratio of 28.2%. Mapletree Logistics Trust, though, as the least debt headroom with a leverage ratio of 39%.
  5. Mapletree Industrial Trust excels in the interest coverage ratio as well. The REIT had a healthy interest coverage of 8.0 at the end of March this year. Elsewhere, Cambridge Industrial Trust has half the interest coverage ratio of Mapletree Industrial Trust. The higher the interest coverage, the more assurance we have that the REIT will be able to cover its interest obligations when it comes due.
  6. Finally, Mapletree Industrial Trust also has the longest weighted average debt maturity. The debt tenure for the REIT was four years. AIMS AMP Capital Industrial REIT on the other hand has an average weighted debt tenure of just 2.2 years.  

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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 contributor Chin Hui Leong owns units in Mapletree Logistics Trust.