This is the 2nd part of a 2-part series where I put 2 REITs that invest in similar property types side-by-side to find out which could potentially be a better investment if one only has funds to invest in either.

In the 1st part (uploaded last Thursday, 20 June), I compared between 2 REITs that invest in properties used for industrial and data centre purposes – Mapletree Industrial Trust (SGX: ME8U) and CapitaLand Ascendas REIT (SGX: A17U), and you can read the article in full here.

In this article, I’m going to do a comparison between CapitaLand Integrated Commercial Trust (SGX: C38U) and Mapletree Pan Asia Commercial Trust (SGX: N2IU) – both REITs invests in properties used for retail and office purposes.

For the uninitiated, here’s a brief context of the 2 REITs:

CapitaLand Integrated Commercial Trust – Initially known as CapitaLand Mall Trust, it was the first REIT listed on the Singapore Exchange, and it invests in just retail properties in Singapore. In November 2020, the REIT was merged with CapitaLand Commercial Trust (which invests in office properties in Singapore and Germany), and was renamed as CapitaLand Integrated Commercial Trust, or CICT for short. The REIT is currently the largest in Singapore (by market capitalisation).

Mapletree Pan Asia Commercial Trust – It was known as Mapletree Commercial Trust when it was listed on the Singapore Exchange, where its portfolio has 5 retail and office properties in Singapore. In July 2022, the REIT was merged with Mapletree North Asia Commercial Trust (which invests in retail and office properties in Hong Kong, China, Japan, and South Korea), and subsequently being renamed as Mapletree Pan Asia Commercial Trust, or MPACT for short.

Let’s now find out which REIT is potentially a ‘better buy’:

Property Portfolio Size & Scope

CapitaLand Integrated Commercial Trust (CICT) has a financial year end on 31 December, while Mapletree Pan Asia Commercial Trust (MPACT) has its financial year end on 31 March.

The following table is a comparison in terms of the number of properties each REIT have in its portfolio, the number of countries where the properties are located, as well as the total assets under management for the latest financial year (for the case of CICT, it is on 31 December 2023, and for the case of MPACT, it is on 31 March 2024):

My Observations: While MPACT is more diversified in terms of the number of countries it has properties in, but CICT has comparatively more properties, as well as a larger total assets under management.

Hence, CICT is the ‘winner’ here.

Financial Performance

Moving on, let us take a look at the 2 REITs’ gross revenue and net property income performance recorded over the last 5 years – for the case of CICT, it is between FY2019 and FY2023, and for the case of MPACT, it is between FY2019/20 and FY2023/24:

CICT (between FY2019 and FY2023):

MPACT (between FY2019/20 and FY2023/24):

My Observations: Both CICT and MPACT experienced year-on-year (y-o-y) improvements in their gross revenue and net property income in 4 out of the last 5 years. The only exception for both REITs was a decline in FY2020 and FY2020/21 respectively, which was attributed to the Covid-19 pandemic.

Looking at the compound annual growth rate (CAGR) of gross revenue and net property income over the past 5 years, CICT achieved 14.7% and 14.9%, respectively, while MPACT recorded 14.7% and 14.0%. Although the growth rates are quite close, I believe CICT stands out slightly due to its higher growth rate in net property income.

Portfolio Occupancy Profile

I will be looking at 2 things on the REITs’ portfolio occupancy profile – the occupancy rate on a portfolio level, as well as portfolio WALE (weighted average lease expiry), recorded over the last 5 years:

CICT (between FY2019 and FY2023):

MPACT (between FY2019/20 and FY2023/24):

My Observations: In terms of portfolio occupancy, they are maintained at a high of above 93.5% throughout the entire 5-year period I have looked at. Both of them have about the same occupancy rate.

However, CICT’s portfolio WALE is slightly better compared to MPACT’s. Hence, CICT edged out as the ‘winner’ here.

Debt Profile

Besides its financial performance and portfolio occupancy profile, debt profile is another area I look at when I evaluate the suitability of a REIT for long-term investment.

In this section, you will find CICT and MPACT’s aggregate leverage, as well as the all-in borrowing cost recorded over the last 5 years:

CICT (between FY2019 and FY2023):

MPACT (between FY2019/20 and FY2023/24):

My Observations: Personally, both REITs have a fairly healthy debt profile, maintaining their debt levels at or below 40.0%.

The all-in borrowing costs are also comparable, particularly over the past 2 years, where they have been identical. Therefore, in my opinion, there isn’t a definitive ‘winner’ between the two.

Distribution Payout to Unitholders

CICT’s management announces distribution payouts to its unitholders on a half-yearly basis – once when releasing the full financial results for the first half of the year, and again when releasing the results for the second half.

In contrast, MPACT’s management declares distribution payouts to its unitholders on a quarterly basis.

That said, the following tables are the 2 REITs’ distribution payout growth over the last 5 years:

CICT (between FY2019 and FY2023):

MPACT (between FY2019/20 and FY2023/24):

My Observations: Both REITs saw a y-o-y decline in their distribution payout in 1 out of 4 years – for CICT, the dip in FY2020 was due to the pandemic, while for MPACT, the drop in FY2023/24 was due to higher borrowing costs, unfavourable foreign currencies (against a strong Singapore Dollar), and higher unit base.

Looking at the distribution payout over the last 5 years, for CICT, the payout for FY2023 was lower compared to the payout in FY2019. For MPACT, it saw a CAGR of 2.4%.

Hence, MPACT was the ‘winner’ here.

Closing Thoughts

Apart from CICT having more properties and a higher asset under management, its financial results and portfolio occupancy are slightly better, but only marginally.

On the other hand, MPACT has experienced a slightly higher compound annual growth rate in its distribution payout over the last 5 years. However, both REITs are ‘tied’ as far as their debt profiles are concerned (and being maintained at healthy levels).

I am personally invested in both REITs and plan to remain so.

For those concerned about overseas exposure, CICT derives over 90% of its gross revenue from its 21 properties in Singapore, whereas MPACT gets 60% of its gross revenue from properties in Singapore.

This concludes my comparison of the 2 REITs. I hope you found the information useful and gained a better understanding of them. Please remember, the opinions expressed above are solely for educational purposes and do not constitute buy or sell recommendations. You’re strongly encouraged to conduct your own due diligence before making any investment decisions.

Disclaimer: At the time of writing, I am a unitholder of CapitaLand Integrated Commercial Trust and Mapletree Pan Asia Commercial Trust.

The post Battle of the Titans: CapitaLand Integrated Commercial Trust vs. Mapletree Pan Asia Commercial Trust first appeared on The Singaporean Investor.