Of all three Mapletree REITs, this is my favourite right now – Mapletree Industrial Trust.
Mapletree Industrial Trust’s 6% yield is the highest versus Mapletree Logistics Trust (5.5% yield) and Mapletree Pan Asia Commercial Trust (5.8% yield).
I wrote Mapletree Industrial Trust’s overview here.
More important, MINT’s financial profile is in a better position to secure its consistent dividends today.
The thing is, the market hasn’t liked MINT for a while – shares stumbled 30% since 2020.
And I expect more its shares to sell off because of the high interest rate uncertainty.
Perhaps, largely because the market is still skeptical about MINT’s high interest costs. I’m not surprised.
Last year, MINT paid an interest rate of 3.5% on its debt, which is actually higher than many Singapore blue-chip REITs.
Mapletree Industrial Trust’s debt maturity profile — still healthy
But what’s interesting – if you dived deeper – is MINT seemed to have its high interest costs under control.
The fact is, MINT’s debt maturity profile is still the best (and healthy) amongst all three Mapletree REITs.
Debt maturity profile tells you the total debt it needs to repay each year.
It’s clear MINT only needs to refinance S$300 million of debt by 2025 – that’s just 10% of total debt.
Meanwhile, bulk of its debt mature between 2026 and 2028…
This is important for REIT investors for two reasons.
First, MINT don’t need to worry where interest rates are going over the next two years.
Here’s my take… interest rates won’t stay too high, for too long. At some point, it’s going to drop.
And I think MINT can comfortably survive this interest rate cycle.
Second, since MINT only needs to refinance a small part of its debt, I expect interest costs to not go up further. Which means, with its 6% dividend yield, I find this a safe, income play for dividends, even if the stock is stuck at the bottom of the market.
What’s more, MINT’s gearing is only at 37% — the average of Singapore REITs’ gearing ratio. And its interest coverage ratio is more than 4.5x.
This further puts MINT at a comfortable financial position.
Mapletree Industrial Trust’s consistent DPU growth
So far, MINT’s DPU grows consistently. It achieved more than 77% growth since it got listed in 2010 — making it one of the best Singapore REIT DPU performers today.
Put it this way, I find there’s little “dilutive effect” for unitholders. I’ll explain.
The thing is, REITs grow by two ways – one is raising rental income and the other is, growing their properties.
The big problem for unitholders is how REITs grow their properties.
You see, REITs raise debt and issue shares (equity) to grow their assets.
And over-issuing shares to buy a property lowers the REITs’ DPU over time.
However, despite MINT’s aggressive asset expansion over the last few years, it continued to achieve a consistent DPU growth. This is still impressive.
And unlike retail and office REITs, MINT has many assets – 141 properties all over the world, spread across business parks, factories, light industrial buildings and data centres.
The fact it has so many properties mean you don’t really worry about tenant concentration risks.
Another strong point is the fact MINT is also moving away from traditional industrial properties, and toward newer data centres.
These properties are typically freehold, have more “sticky” tenants and currently riding the tailwind of an emerging technology boom.
Over the past years, MINT grew to S$9 billion of total assets, and half of its portfolio is already in data centres.
And it continues to diversify.
Recently, MINT also bought another data centre – fully occupied with a 20 years lease — in Japan.
There’s much interest in Japan right now – a recovering stock market, cheap borrowing costs and a relatively healthy property market.
The interesting thing is Japan is the third largest data centre market in Asia. And it’s a country with a massive growing e-commerce market.
Further, Osaka is still a largely underserved market.
Though this property purchase isn’t going to move MINT’s profitability needle, DPU will only grow by 2%.
MINT’s US data centers still dominate its property portfolio. But its latest acquisition should bring its total assets closer to S$10 billion today.
This makes their dividend yield probably more secured, and predictable.
Something I like.
My final thoughts
At 6% dividend yield, MINT is probably a blue-chip worth looking at.
It doesn’t have a huge debt to be repaid over the next two years, gearing ratio is low, and it has a well-balanced industrial property across different sectors of the industrial segments.
Unlike retail and office properties that typically have chunky tenant rental contribution, MINT’s many properties should help secure its dividend yield even if its stock goes nowhere today.
Sometimes, investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan
