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…
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 part 1 and part 2, I looked at the REITs’ track records of growth in distribution per unit (DPU) in the last five years as well as their debt profiles. Mapletree Industrial Trust has the better DPU, while Mapletree Logistics Trust has a more favourable debt profile. In part three, I’m turning my focus to the final comparison: valuation.
I’m focusing mainly on two valuation metrics: price-to-book (P/B) ratio and distribution yield.
Mapletree Logistics Trust and Mapletree Industrial Trust have P/B ratios of 1.1 and 1.4, respectively. Mapletree Logistics Trust’s lower P/B ratio suggests it has a lower valuation.
In terms of valuation, Mapletree Logistics Trust and Mapletree Industrial Trust have distribution yields of 5.7% and 6.0%, respectively. The higher a REIT’s yield, the lower its valuation. Thus, we can see that Mapletree Industrial Trust has a lower valuation based on distribution yield.
Since both REITs scores a point, there is no clear winner, here. Mapletree Industrial Trust has a lower valuation in terms of its high distribution yield, but Mapletree Logistic Trust has a lower P/B ratio.
I’ll call it a tie between the two since there’s no clear winner.
For investors who are seeking for higher distribution yield with strong track record of growing its distribution per unit, Mapletree Industrial Trust seems like a better choice for consideration.
On the other hand, investors who prefer stability and safety might prefer Mapletree Logistic Trust because of its more favorable debt profile and low P/B ratio.
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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.