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Is Mapletree Logistics Trust or Mapletree Industrial Trust a Better Buy Now? Part 2

Mapletree Logistics Trust (SGX: M44U) and Mapletree Industrial Trust (SGX: ME8U) are real estate investment trusts (REITs) with a focus on industrial assets.

The former specializes in logistics properties, owning 140 logistics properties around Asia and Australia. The latter owns a more diversified group of 86 industrial properties and data centres in the U.S. (through its 40% joint venture). Both companies share a common sponsor, Mapletree Investments Pte Ltd.

Given that both REITs are exposed to industrial properties, investors might want to know which is a better buy now. To decide, I’ve put the duo to a test made up of three parts.

In a previous article, I looked at the track record of growth in distribution per unit (DPU) in the last five years. Mapletree Industrial Trust came in ahead in that test. Now I’m looking at the next part of my comparison: each REIT’s debt profile (both REITs have a 31 March year-end).

The showdown

As of 31 December 2018, Mapletree Logistics Trust has a gearing ratio of 38.8%. Its weighed average term to maturity is 4.1 years, with no debt refinancing needed until FY 19/20. The all-in cost of borrowing is at 2.7%.

As of 31 December 2018, Mapletree Industrial Trust has a gearing ratio of 34.7%. Its weighed average term to maturity is 3.1 years, and the all-in cost of borrowing is at 2.9%.

Mapletree Industrial Trust has a slightly lower gearing compared to Mapletree Logistics Trust, yet Mapletree Logistics Trust has a longer term to maturity and lower borrowing costs.

Conclusion

Both REITs have acceptable debt profiles. Mapletree Logistics Trust is slightly better positioned in the long run mainly because of its lower cost of borrowing and longer term to maturity.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore recommends Mapletree Industrial Trust.