When I consulted my blog readers for presentation suggestions at the REITs Symposium last month (May 2024), one idea was to compare REITs investing in similar property types to determine which is a “better buy”.
A similar question arose when James Yeo, founder of InvestKaki, conducted a poll to see what community members on InvestingNote wanted to hear from me during our interview session last week (if you missed out, you can check it out here).
With that in mind, here’s my plan: over the next 2 weeks (this week, as well as next week), I will compare two REITs with similar investment profiles to identify which might be a ‘better buy’ for those with limited funds to invest.
As the title suggests, today, I will be comparing two REITs that invest in industrial and data centre properties: Mapletree Industrial Trust (SGX: ME8U) and CapitaLand Ascendas REIT (SGX: A17U).
Let’s find out which one is a ‘better buy’:
Property Portfolio Size & Scope
Mapletree Industrial Trust’s financial year ends on 31st March, whereas CapitaLand Ascendas REIT’s financial year ends on 31st December.
The table below compares the two REITs based on the number of properties they hold, the number of countries where their properties are located, and their total assets under management as of the end of their most recent financial years (for Mapletree Industrial Trust, it is on 31 March 2024, and for CapitaLand Ascendas REIT, it is on 31 December 2023):
| Mapletree Industrial Trust | CapitaLand Ascendas REIT | |
| No. of Properties | 140 | 232 |
| No. of Countries | 3 (Singapore, United States, and Japan) | 7 (Singapore, United States, Australia, United Kingdom, the Netherlands, Switzerland, and France) |
| Total Assets Under Management (S$’bil) | S$8.9 billion | S$16.9 billion |
My Observations: CapitaLand Ascendas REIT emerges as the clear ‘winner’ here, with significantly more properties, investments in a greater number of countries, and assets under management that are twice the size of those held by Mapletree Industrial Trust.
Financial Performance
In terms of its gross revenue and net property income growth over the most recent 5 years, how has both REITs performed? Let us find out in this section:
Mapletree Industrial Trust (between FY2019/20 and FY2023/24):
| FY 2019/20 | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | |
| Gross Revenue (S$’mil) | $405.9m | $447.2m | $610.1m | $684.9m | $697.3m |
| Net Property Income (S$’mil) | $318.1m | $351.0m | $472.0m | $518.0m | $521.0m |
CapitaLand Ascendas REIT (between FY2019 and FY2023):
| FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | |
| Gross Revenue (S$’mil) | $699.1m | $1,049.5m | $1,226.5m | $1,352.7m | $1,479.8m |
| Net Property Income (S$’mil) | $537.7m | $776.2m | $920.8m | $968.8m | $1,023.2m |
My Observations: Both REITs have achieved year-on-year (y-o-y) improvements in their gross revenue and net property income every year over the past 5 years, which is, in my opinion, an impressive feat.
Regarding their compound annual growth rate (CAGR) over the last 5 years, Mapletree Industrial Trust achieved 11.4% in gross revenue and 10.4% in net property income, while CapitaLand Ascendas REIT posted 16.2% in gross revenue and 13.7% in net property income.
When comparing the growth rates of the two REITs’ financial performances over the past five years, CapitaLand Ascendas REIT emerges as the ‘winner’.
Portfolio Occupancy Profile
Next, let’s compare the portfolio occupancy profiles of the two REITs by examining their occupancy rates over the past 5 years, as well as their respective weighted average lease expiry (WALE):
Mapletree Industrial Trust (between FY2019/20 and FY2023/24):
| FY 2019/20 | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | |
| Portfolio Occupancy (%) | 91.5% | 93.7% | 94.0% | 94.9% | 91.4% |
| Portfolio WALE (years) | 4.2 years | 4.0 years | 4.1 years | 3.9 years | 4.4 years |
CapitaLand Ascendas REIT (between FY2019 and FY2023):
| FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | |
| Portfolio Occupancy (%) | 90.9% | 91.7% | 93.2% | 94.6% | 94.2% |
| Portfolio WALE (years) | 3.9 years | 4.1 years | 3.8 years | 3.8 years | 3.9 years |
My Observations: Both REITs have maintained a very high portfolio occupancy rate over the last five years, consistently exceeding 90%.
However, Mapletree Industrial Trust stands out slightly in terms of performance, with a marginally higher occupancy rate and portfolio WALE compared to CapitaLand Ascendas REIT.
Debt Profile
In the current high-interest rate environment, which I expect to persist over the next 12 months, it is crucial to ensure that REITs are not excessively leveraged.
In this section, you will find a comparison of the debt profiles of the 2 REITs by examining their aggregate leverage, all-in cost of borrowing, and the percentage of borrowings at fixed rates recorded over the past 5 years:
Mapletree Industrial Trust (between FY2019/20 and FY2023/24):
| FY 2019/20 | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | |
| Aggregate Leverage (%) | 37.6% | 40.3% | 38.4% | 37.4% | 38.7% |
| All-in Cost of Borrowing (%) | 2.9% | 2.8% | 2.4% | 3.5% | 3.1% |
| % of Borrowings at Fixed Rates (%) | 73.4% | 76.8% | 70.5% | 75.5% | 84.6% |
CapitaLand Ascendas REIT (between FY2019 and FY2023):
| FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | |
| Aggregate Leverage (%) | 35.1% | 32.8% | 35.9% | 36.3% | 37.9% |
| All-in Cost of Borrowing (%) | 2.9% | 2.7% | 2.2% | 2.5% | 3.5% |
| % of Borrowings at Fixed Rates (%) | 75.8% | 78.1% | 79.4% | 79.4% | 79.1% |
My Observations: Both REITs have a healthy debt profile, with their aggregate leverages maintained at below 40%.
However, if I were to compare which has a ‘healthier’ debt profile, then it will be CapitaLand Ascendas REIT, as comparatively, it has maintained a slightly lower aggregate leverage compared to Mapletree Industrial Trust in most years, and at the same time, a slightly lower all-in cost of borrowings, and maintaining a higher percentage of borrowings at fixed rates.
Distribution Payout to Unitholders
As far as distribution payout to unitholders are concerned, as a unitholder of Mapletree Industrial Trust, you will receive a distribution payout on a quarterly basis. However, unitholders of CapitaLand Ascendas REIT will receive a distribution payout once every half-yearly.
The following table is the growth of the 2 REITs’ distribution payout to unitholders over the last 5 years:
Mapletree Industrial Trust (between FY2019/20 and FY2023/24):
| FY 2019/20 | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | |
| Distribution Per Unit (S$) | $0.1224 | $0.1255 | $0.1380 | $0.1357 | $0.1343 |
CapitaLand Ascendas REIT (between FY2019 and FY2023):
| FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | |
| Distribution Per Unit (S$) | $0.1149 | $0.14688 | $0.15258 | $0.15798 | $0.15160 |
My Observations: Mapletree Industrial Trust’s distribution payout fell in the most recent 2 years (i.e., in FY2022/23 and FY2023/24) due to a larger unit base, while CapitaLand Ascendas REIT’s distribution payout only fell in the latest full year under review (i.e., FY2023) due to higher finance cost and an enlarged unit base.
In terms of the CAGR of their distribution payout over the last 5 years, for Mapletree Industrial Trust, it was at 1.9%, and for CapitaLand Ascendas REIT, it was at 5.7%.
Once again, CapitaLand Ascendas REIT came out on top for having a higher CAGR growth in its distribution payout over the last 5 years.
Closing Thoughts
CapitaLand Ascendas REIT, in my opinion, is a ‘clear winner’ between the ‘battle of the 2 REITs’ here, as it:
- Has much more properties in its portfolio, investments in a greater number of countries, and a much higher total assets under management;
- Stronger CAGR in terms of growth in its gross revenue and net property income over the last 5 years;
- A ‘healthier’ debt profile due to its slightly lower aggregate leverage and all-in cost of borrowings, and at the same time, a higher percentage of borrowings at fixed rates;
- Higher CAGR in terms of improvements in its distribution payout to unitholders.
With that, I have come to the end of today’s comparison post. Do take note that the contents above does not imply any ‘buy‘ or ‘sell’ calls for any of the 2 REITs. You should always do your own due diligence before you make any investment decisions.
Next week, I will be putting another 2 REITs (in CapitaLand Integrated Commercial Trust and Mapletree Pan Asia Commercial Trust) side-by-side to find out which is a ‘better buy’. Stay tuned for that!
Disclaimer: At the time of writing, I am a unitholder of both Mapletree Industrial Trust and CapitaLand Ascendas REIT.
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