Readers who have bookmarked my Dividend Stock Tracker, would have note that I categorize the REITs into the nature of the REITs.
One category that is getting attention recently have been the Industrial REITs due to the IPO of Mapletree Industrial REIT.
The question many are asking is how does this new REIT rank among its peers.
In my opinion we can categorize the industrial reits into 2 categories:
- Large Capitalization, Strong Sponsers, High NAV, Low Yielders
- Smaller Capitalization, Discounted NAV, High Yielders
Large Capitalization, Strong Sponsers, High NAV, Low Yielders
These REITs seems to behave similarily on the SGX. They are make up by former assets in large parent sponsers and have the backing of these sponsers, so they have the first right of refusal on assets.
Since they are larger capitalized, institutional investor take notice of them and they are likely to trade higher to their peers in the other categories and their prices are closer to NAV or even trading above their NAV.
Strong sponsers would enable them to steer better during recession or times where credit is tight.
The first industrial REIT to be listed here and probably the largest in Singapore. Considered a mature REIT that doesn’t add much yield accretive assets any more and is backed by parent Ascendas.
Having Ascendas REIT in your portfolio provides stable yield vs your other growth plays and you will also be able to tap funds flow into the Singapore market when there is a rise in liquidity tides
Ascendas REIT current yield is 5.1% and trading at a premium to book value. Debt to Assets is average.
Mapletree Logistics REIT
Spin off by sponsers Mapletree investments, this is a large logistic REIT with vast assets in Singapore and Japan in particular.
Its strategy have been in acquiring overseas assets in Japan for example that are more yield accretive.
Mapletree Logistics REIT current yield is 6.4% and trading at 0.7 times PTB and Debt to Assets is 32%.
Mapletree Industrial REIT
The latest IPO darling is smaller than its peers above but nevertheless has a strong sponser to tap.
Management have indicated that they will not be acquiring anything soon.
Mapletree Industrial REIT current yield is likely to be around 7.6% – 8% and trading at a premium to book value. Debt to assets eventually should be higher than 35%, indicating difficulty to leverage up further.
Smaller Capitalization, Discounted NAV, High Yielders
These are the “forgotten childs” or REITS that do not have a strong sponsers. This and the fact that they are smaller makes them less viable candidates for overseas funds.
Weak sponsers also make them trade at a higher yield, indicating greater risks vs their peers and they may find difficulties when they come to finding tenants, re-financing debts and finding new yield accretive assets.
AIMS AMP Capital
Formerly known as MacArthurCook Industrial, this Australian linked REIT have much turbulence during the credit crisis in 2007-2008 where they have problems re-financing their loans.
Very much indicate the problem of smaller REITs and thus yield and market valuation is reflective of this risk vs its larger peers.
AIMS AMP Capital current yield is 9.2% and trading at 0.7 times book value and debt to assets is 25%.
Cambridge Industrial Trust
Probably the first independent REIT which seems to not work so well in Singapore environment. Like AIMS, had issues refinancing during the credit crisis but manage to steadied its ship.
Cambridge Industrial current yield is 9.4% and trading at 0.7 times book value.
Cache Logistics Trust
A recently listed logistics trust that has a sponser in CWT a local strong logistics player. Its tenant based are multi-national companies indicating risks but as long as Singapore remains an important transportation hub in the global economy, these companies are likely to stay as long tenants.
Cache Logistics Trust current yield is 7.9% and its debt to assets is 28%.
Disclosure: Vested in AIMS AMP Capital and Cache Logistics Trust.
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