MapleTree Industrial Trust-Dividend Share Price Analysis

Interested in investing in Commercial Properties in Singapore? If you are, you would have come across Capitaland Commercial Trust, However, Capital Commercial Trust is mainly focused in Grade A office properties and thus does not give you other type of commercial exposure. There are other types of commercial properties like logistics and industrials. One good example of an industrial reit is Mapletree Industrial Trust. 

To generate real estate investment trust (reit) dividend, Mapletree Industrial Trust’s main strategy has always been to invest in income producing real estate that is used for industrial purposes in Singapore. However, in recent years, the REIT has also decided to invest overseas. Its investment is primarily in data centers beyond Singapore. To date, most of these overseas investments are done in collaboration with its sponsor, Mapletree Investment, which also happen to be a wholly owned subsidiary of Temasek. 

Similar to how Capitaland Commercial Trust and Capitaland Mall Trust are sister reits which are under the larger Capitaland Group, Mapletree Industrial Trust also has its own sister reit in the form of Mapletree Logistics Trust.

Below is a historical price chart for Mapletree Industrial Trust.

Distributions and Yield

Even before we spend time looking at the merits of the Mapletree Industrial Trust business, it is important to evaluate where the stock is trading. However, Reits are not exactly stocks. As covered in why you should invest in reits, Reits have properties that make them a hybrid between stock and bonds. One of these properties is the need to distribute dividends. As of 2018/2019, Mapletree Industrial’s Dividend was at 12.16 cents for the full financial year. 

Distribution per Unit (DPU) in Singapore cents
Financial Period 1st Quarter ended 30 June 2nd Quarter ended 30 September 3rd Quarter ended 31 December 4th Quarter ended 31 March Full Financial Year
2010/2011 1.521 1.93 3.45
2011/2012 1.98 2.05 2.16 2.22 8.41
2012/2013 2.26 2.29 2.32 2.37 9.24
2013/2014 2.43 2.47  2.51 2.51 9.92
2014/2015  2.51  2.60  2.67  2.65  10.43 
2015/2016 2.73  2.79  2.82  2.81  11.15 
2016/2017 2.85  2.83  2.83  2.88 11.39
2017/2018  2.92  3.00  2.882  2.95  11.75 
2018/2019 3.00  3.01  3.07  3.083  12.16 
2019/2020 3.10       

If we assume that Mapletree Industrial make the same level of distributions this year, buying into the reit at SGD 2.47 will mean a distribution yield of 4.9%. There are a few ways to look at this. 

One sure fire way is to look at whether the distribution yield will be an attractive level for the company. Many will have heard of the recent acquisition by Mapletree Industrial of Digital Realty’s 13 Data centers in the United States, that acquisition was at a cap rate of around 6.6%. Further the cap rate that Mapletree use to evaluation their own properties is 6-7%. Hence, all things constant, 4.9% does look a little low and SGD 2.47 seems like too steep a price to pay. Or is it?

Many will also state that Mapletree Industrial has been growing rapidly and its distribution growth has been nothing short of impressive. From 3.45 cents in 2010, Mapletree industrial has grown distributions 4 times to 12.16% in 2019.