CapitaLand and Mapletree are both major Temasek-owned real estate companies with global portfolios, but they differ in their specific focus and structures. Due to their differences, the various REITs have outperformed one another at different points in time. Here, we take a look at which group has the better REITs today.
| REIT | Ticker (SGX) | Market Cap (S$’Mil) | Yield | Current P/B ratio | Gearing Ratio | 1-Year Total Return (%) | 3-Year Total Return -annualised (%) |
|---|---|---|---|---|---|---|---|
| Mapletree Industrial REIT (MIT) | ME8U | $5,504m | 7.0% | 1.1x | 40.1% | -6.2% | -2.3% |
| CapitaLand Ascendas REIT (CLAR) | A17U | $11,661m | 5.7% | 1.2x | 38.9% | 6.4% | 4.2% |
| Mapletree Logistics Trust (MLT) | M44U | $5,633m | 7.3% | 0.8x | 40.1% | -12.3% | -7.2% |
| Mapletree Pan Asia Commercial Trust (MPACT) | N2IU | $6,220m | 6.8% | 0.7x | 37.7% | 3.2% | -7.6% |
| CapitaLand Integrated Commercial Trust (CICT) | C38U | $15,293m | 5.2% | 1.0x | 38.7% | 13.2% | 3.2% |
| CapitaLand Ascott Trust (CLAS) | HMN | $3,266m | 7.1% | 0.8x | 39.9% | 1.7% | -3.4% |
| CapitaLand China Trust (CLCT) | AU8U | $1,201m | 8.2% | 0.6x | 42.6% | 12.0% | -8.6% |
| CapitaLand India Trust (CLINT) | CY6U | $1,331m | 6.9% | 0.7x | 41.5% | 0.0 | 2.1% |
All 5 CapitaLand REITs delivered positive total returns in the last 1 year, ranging from 0% to 13.2%. In contrast, 2 out of 3 Mapletree REITs delivered negative returns, with MPACT being the best performer among the 3, delivering a positive total return of 3.2%. Even then, MPACT would have placed only 4th when compared against the CapitaLand REITs.
It has been clear in the past years that the industry in which the REIT is exposed to matters significantly. REITs who have assets in more resilient segments. such as Singapore Retail, or those enabled by sectoral tailwinds such as data centres, have outperformed other REITs.
This can be seen in the performance of CICT & CLAR, which are exposed to these two sectors.
There is also a general belief that the underperformance of the Mapletree REITs is due to its geographical exposure.
It is true that geographical exposure plays a significant role here for various reasons. Geographical diversification in REITs is crucial because it helps mitigate risks associated with localized economic downturns. By investing in REITs with properties in different regions, investors can reduce their exposure to the negative impacts of events in any single area.
However, what we’ve seen is that Singapore has not only been one of the most resilient economy, the Singapore Dollar has also been one of the most resilient, outperforming against most currencies in which the Singapore REIT market has an exposure to. This means the value and income of the REITs who diversified has diminished.
Here we look to see if there is a direct correlation between geography and performance for the Mapletree & CapitaLand REITs.
| REIT | Singapore | HK + China | SEA | South Korea / Japan | India / Rest of Asia | ANZ | Europe | US |
|---|---|---|---|---|---|---|---|---|
| Mapletree Industrial REIT (MIT) | 48% | – | – | 7% | – | – | – | 46% |
| CapitaLand Ascendas REIT (CLAR) | 65% | – | – | – | – | 13% | 10% | 12% |
| Mapletree Logistics Trust (MLT) | 20% | 41% | 8% | 22% | 1% | 7% | – | – |
| Mapletree Pan Asia Commercial Trust (MPACT) | 56% | 35% | – | 8% | – | – | – | – |
| CapitaLand Integrated Commercial Trust (CICT) | 95% | – | – | – | – | 3% | – | 3% |
| CapitaLand Ascott Trust (CLAS) | 19% | 3% | 6% | 19% | 1% | 10% | 24% | 19% |
| CapitaLand China Trust (CLCT) | – | 100% | – | – | – | – | – | – |
| CapitaLand India Trust (CLINT) | – | – | – | – | 100% | – | – | – |
We noticed that the REITs with the highest Singapore portfolio exposure were the ones who performed better, such as CLAR & CICT. CICT is the strongest performer and has the highest exposure to the Singapore market. MPACT also has a substantial Singapore portfolio but we think its performance was weigh down by its HK + China portfolio.
Looking at the 3-year annualised return, the worst performers are CLCT, MPACT & MLT. These are the three REITs with the biggest HK + China exposure.
There are several Mapletree and CapitaLand REITs operating in similar industries, making them suitable for comparison. Here we look at two such sets of comparisons.
1) MIT vs CLAR vs MLT
The first set of comparison focuses on the Industrial/Data Centre/Logistics segment.
MIT is in the Industrial and Data Centre segment while MLT is in the logistics segment. CLAR is diversified across all three segments. Here we look at the segment mix.
| REIT | Industrial | Data Centre | Logistics | Business Space | Life sciences |
|---|---|---|---|---|---|
| Mapletree Industrial REIT (MIT) | 44.4% | 55.6% | – | – | – |
| CapitaLand Ascendas REIT (CLAR) | 20% | 8% | 27.6% | 37% | 9% |
| Mapletree Logistics Trust (MLT) | – | – | 100% | – | – |
Here we look at the relative statistics of each REIT.
| REIT | Occupancy | Rental reversion (latest qtr) | WALE | Cost of debt | Credit rating | FY24 DPU | FY23 DPU |
|---|---|---|---|---|---|---|---|
| Mapletree Industrial REIT (MIT) | 91.6% | 8.1% | 4.4 yrs | 3.0% | Fitch: BBB+ | 13.57 cents | 13.43 cents |
| CapitaLand Ascendas REIT (CLAR) | 91.5% | 11.0% | 3.8 yrs | 3.6% | Moody: A3 | 15.205 cents | 15.160 cents |
| Mapletree Logistics Trust (MLT) | 96.2% | 5.1% | 2.8 yrs | 2.7% | Fitch: BBB+ | 8.053 cents | 9.003 cents |
We can see that while CLAR currently has the weakest occupancy, it has the strongest rental reversion which points to further DPU growth, especially if it manages to backfill its occupancy at high rent rates. This helps explains its strong share price performance. MIT’s statistics seem to fare comparably which makes us think that MIT is now undervalued, especially with its attractive 7% yield.
We can understand why MLT is one of the weakest performers in the overall list as DPU fell significantly while rental reversion has been much weaker before this quarter, with its Chinese portfolio even recording negative rental reversion in 1Q24.
2) MPACT vs CICT
The next set of comparison focuses on the Commercial/Retail segment.
Both MPACT and CICT have significant exposure to the commercial and retail space in Singapore while MPACT has a larger HK+China portfolio as a result of its merger with MNACT a few years ago. Here we look at the segment mix.
| REIT | Commercial | Business Park | Integrated Development | Retail |
|---|---|---|---|---|
| Mapletree Pan Asia Commercial Trust (MPACT) | 25.0%* | 25.2% | – | 49.8% |
| CapitaLand Integrated Commercial Trust (CICT) | 34.7% | – | 29.3% | 36.0% |
*Included retail segment of commercial assets due to small quantum
Here we examine the relative statistics of each REIT.
| REIT | Occupancy | Rental Reversion | WALE | Cost of debt | Credit Rating | FY24 DPU | FY23 DPU |
|---|---|---|---|---|---|---|---|
| Mapletree Pan Asia Commercial Trust (MPACT) | 89.6% | 3.6% | 2.2 yrs | 3.51% | Moody: Baa1 (negative) | 8.02 cents | 8.91 cents |
| CapitaLand Integrated Commercial Trust (CICT) | 96.4% | Retail: 10.4% Office: 5.4% | 3.2 yrs | 3.4% | Moody: A3 S&P:A- | 10.88 cents | 10.75 cents |
Here, it becomes clear why CICT is one of the better performers on the list, while MPACT ranks among the weakest. CICT scores well across all key statistics such as occupancy, rental reversion, WALE and DPU growth while MPACT was dragged down by its portfolio outside of Singapore.
Closing statements
Fundamentally, both Mapletree and CapitaLand are strong government-linked sponsors. However, their industry and geographical exposure differ. We guess this makes strategic sense from a Temasek perspective, as the combined exposure gives Temasek a broad and very well-diversified portfolio.
However, investors do not have the option of investing in Temasek directly. Instead, they have to pick either a REIT ETF or invest in an entire basket of Mapletree + CapitaLand REIT which would also mean investing in somewhat unique REITs such as CLAS, CLCT & CLINT.
Based on our analysis, we found that CapitaLand REITs such as CLAR and CICT currently display stronger fundamental statistics compared to their Mapletree REITs. However we also found one potential undervalued play, being MIT, with a close to 7% yield as its statistics have recovered to similar levels to CLAR.
With the current 10-year T-bond hovering around 2.1% and the average yield spread of the sector at 3.8%, MIT is not only trading at cheaper levels than CLAR, but also offers a yield above the sector average—despite its status as a blue-chip S-REIT.
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