Mapletree Industrial Trust: A Data-Center-Rich S-REIT Beating U.S. Peers

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S-REITs offer stability, high distribution yields, and lower volatility compared to global peers. They also have a favorable regulatory environment and strong legal frameworks.The Trust has a history ...

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They also have a favorable regulatory environment and strong legal frameworks.The Trust has a history ...</p>\n\n<a href=\"https://seekingalpha.com/article/4728925-mapletree-industrial-trust-a-data-center-rich-s-reit-beating-us-peers\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Mapletree Industrial Trust: A Data-Center-Rich S-REIT Beating U.S. Peers</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMapletree Industrial Trust: A Data-Center-Rich S-REIT Beating U.S. Peers\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-24 22:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4728925-mapletree-industrial-trust-a-data-center-rich-s-reit-beating-us-peers><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>S-REITs offer stability, high distribution yields, and lower volatility compared to global peers. They also have a favorable regulatory environment and strong legal frameworks.The Trust has a history ...</p>\n\n<a href=\"https://seekingalpha.com/article/4728925-mapletree-industrial-trust-a-data-center-rich-s-reit-beating-us-peers\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4224","symbol_name":"工业房地产信托","start_time":0,"source_url":"https://seekingalpha.com/article/4728925-mapletree-industrial-trust-a-data-center-rich-s-reit-beating-us-peers","article_id":"2478513606","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1939500219/image_1939500219.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2478513606","pubTimestamp":1729778400,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"S-REITs offer stability, high distribution yields, and lower volatility compared to global peers. They also have a favorable regulatory environment and strong legal frameworks.The Trust has a history of increasing distributions per unit, despite recent dilution and rising interest rates, and is strategically expanding into high-demand sectors like data centers.The Trust's 5.5% yield remains competitive, outperforming U.S. REITs, while the stock has delivered sector-beating returns over the long term.Investors should be mindful of risks, such as interest rate developments, liquidity challenges when trading OTC, and FX risks, although they are not as worrisome as they seem.   Mlenny Earlier in October, I covered Mapletree Logistics Trust , a quality Singapore-based logistics REIT with compelling prospects. Seeing that more people are interested in Singapore-based REITs than I imagined, I figured it would be a good idea to share my thoughts on its sister REIT, Mapletree Industrial Trust .","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4224":"工业房地产信托","BK4171":"工业房地产投资信托","MAPIF":"Mapletree Industrial Trust"},"translate_title":"丰树工业信托：数据中心丰富的S-REIT击败美国同行","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MAPIF":0.9},"content_text":"S-REITs offer stability, high distribution yields, and lower volatility compared to global peers. They also have a favorable regulatory environment and strong legal frameworks.The Trust has a history of increasing distributions per unit, despite recent dilution and rising interest rates, and is strategically expanding into high-demand sectors like data centers.The Trust's 5.5% yield remains competitive, outperforming U.S. REITs, while the stock has delivered sector-beating returns over the long term.Investors should be mindful of risks, such as interest rate developments, liquidity challenges when trading OTC, and FX risks, although they are not as worrisome as they seem.   Mlenny Earlier in October, I covered Mapletree Logistics Trust (OTCPK:MAPGF), a quality Singapore-based logistics REIT with compelling prospects. Seeing that more people are interested in Singapore-based REITs than I imagined, I figured it would be a good idea to share my thoughts on its sister REIT, Mapletree Industrial Trust (OTCPK:MAPIF). It's also managed by Mapletree and is about the same size as the Logistics vehicle, currently valued at about $7 billion Singapore Dollars (5.3 billion USD). Note that Mapletree has also listed its Pan Asia Commercial Trust (OTCPK:MPCMF), which is also an interesting vehicle, which we may examine in another piece. Why Consider Mapletree Industrial Trust? There are two main reasons I recommend Mapletree Industrial Trust right now. Firstly, as I mentioned in my Logistics Trust piece, Singaporean REITs now offer a much more attractive setup than their American peers. Second, the trust itself presents a strong investment case. The Appeal of S-REITs To quickly elaborate on the first point, especially if you are unfamiliar with Singapore REITs (S-REITs), note that these investment vehicles are generally popular among income-oriented investors due to their stability and high yields. They are supported by a robust regulatory framework and feature prolonged track records of delivering consistent returns. Today, they look particularly interesting, as fresh data from REITAS (the Real Estate Investment Trust Association of Singapore) that was published literally a few hours ago confirms that as of the end of Q3, S-REITs boast some of the highest distribution yields globally, averaging around 6.3%, along with lower volatility relative to their peers. S-REITs Distribution Yields & Volatility (REITAS) Now add that Singapore features a very business-friendly environment, strong legal and tax structures, and a regulatory cap on gearing ratios placed at 50%, and you can see why the country's REIT make for quite attractive investment vehicles. The Appeal of Mapletree Industrial Trust Regarding the appeal of the Trust itself, I think a look at its dividend history offers a good glimpse of its prolonged history of unitholder value creation. As you can see, the company has consistently increased its distributions per unit (DPU). In fact, over the past decade (FY14/15 to FY23/24), the Trust's DPU has grown at a CAGR of 3%. Surely, this may not sound like an impressive pace of growth, though you should consider that distribution growth has lagged over the past three years due to some above-average dilution and rising interest rates, which have suppressed distributable earnings and their per-unit figure. Mapletree Industrial Trust Dividend Growth History (1QFY24/25 Investor Presentation) Nevertheless, there are some critical facts to note regarding these two points. Firstly, despite the Trust being indeed negatively affected by rising rates in recent years, it still features a particularly low weighted average borrowing rate, which stood at 3.2% at the end of last quarter. I think this is evidence of both the very attractive financing terms Singapore REITs can attract, which adds to my previous point, and creditors' confidence in the Trust. Moreover, dilution has indeed been a concern lately. However, I think it's due to a combination of factors that are not necessarily too concerning. Mapletree Industrial Trust Unit Count (Koyfin) Firstly, the manager gets paid in units, which, while dilutive, also aligns interests with common unitholders. Secondly, the Trust recently resumed its Distribution Reinvestment Plan (DRP), which should provide flexible long-term financing and maintain a healthy debt/equity ratio. Lastly, increased equity issuance has occurred as part of the Trust's ambition to bet big on data centers. Last year's acquisition of Osaka Data Centre, for instance, was a notable contributor in the Trust's latest quarter, while data centers, overall, now account for over 55% of its property mix. Mapletree Industrial Trust Asset Mix (1QFY24/25 Investor Presentation) Considering the soaring demand for data centers driven by AI deployment, with Goldman Sachs Research estimating a 160% increase in data center power demand by 2030, I believe the Trust's recent dilution will begin to translate into noteworthy revenue and distributable earnings growth, thus justifying the recent costly property buyouts. This, in turn, should translate to a more meaningful resumption of DPU growth. In the meantime, this comes at a point where the Trust's yield still hovers at rather attractive levels. As you can see, the Trust's unit price gains in recent months have pushed its dividend yield lower, from nearly 6.5% a couple of years ago to 5.5% today. Yet, the Trust's yield still remains notably higher compared to the yield of the largest real estate ETF, the Vanguard Real Estate Index Fund ETF (VNQ). Mapletree Industrial Trust's Distribution Yield Against VNQ (Koyfin) Now, you may argue that the Trust's higher yield, historically, may have come at the cost of inferior growth prospects or unit price gains, yet this is hardly the case. As you can see in the chart below, the Trust has outperformed its American peers by a wide margin over the past decade. Mapletree Industrial Trust's Share Price Gains vs. VNQ (Koyfin) This also holds true over the past three years, despite the sector challenges (which apply to both vehicles) and the Trust's above-average dilution. Mapletree Industrial Trust's Share Price Gains vs. VNQ (Koyfin) Also, in line with the REITAS claim of relatively lower volatility, these returns have occurred with indeed lower volatility, especially during critical periods like the sector crash that took place in the outbreak of the COVID-19 pandemic. Mapletree Industrial Trust Volatility vs. VNQ (Koyfin) For these reasons, the Trust is trading at what appears to be a fair multiple of 19.2x its forward distributable earnings, given that the per-unit figure is expected to move upwards moving forward - especially given you are also getting paid a notably higher yield compared to most U.S. REITs. Also, note that Singapore doesn't have a dividend/distribution withholding tax on most equities. There is a 10% WTH tax on REITs, but given that the Trust usually breaks down its distribution between a normal payout and a capital return (which is tax-free), the actual WTH tax on each distribution actually ends up being quite lower than 10%. Risks to Consider Of course, there are some risks to consider as well. Firstly, interest rates remain relevant, as the market likely expects the average interest cost of the Trust to decline. If rates remain high globally, especially in the U.S. (given that over 2/3 of the Trust's borrowings are in USD), the market may adjust its expectations against the Trust. However, again, the Trust's debt cost is already quite low in relative terms. Secondly, liquidity risk can be a concern for investors trading the Trust's units over-the-counter (OTC) with little to no volume. This can lead to wider spreads and more difficult trade execution. However, as I mentioned in my Logistics piece, this risk is easily resolved by trading the shares directly on the Singapore Exchange under ticker ME8U.SI, where liquidity is plentiful. Finally, there is FX risk to consider due to the Trust's exposure to international markets like North America and Japan. Yet, this is not really a concern, in my view, because the Trust's revenue is derived from stable, reliable currencies, including the US Dollar and Japanese Yen, besides Singapore Dollars. On top of that, the Trust employs hedging strategies that further insulate the quality of its revenues.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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