Frasers Logistics & Commercial Trust Review @ 12 November 2023

Basic Profile & Key Statistics

• Main Sector(s): Office, Industrial & Logistics
• Country(s) with Assets: Australia, Singapore, Germany, England & Netherlands
• No. of Properties (exclude development/associate/fund): 108

Key Indicators

Performance Highlight

Gross revenue and NPI declined YoY mainly due to a combination of weaker AUD/SGD exchange rate, lower surrender fee income and lower average occupancies at Maxis Business Park and 357 Collins Street. Distributable income and DPU have declined due to the above as well as higher finance costs, but offset by higher distribution from divestment gain.

Rental Reversion

FLCT achieved strong portfolio rent reversion for the latest quarter, with 17.8% for incoming vs outgoing and 30.1% for average vs average.

Acquisition

FLCT acquired a freehold forward funding logistics development at Maastricht, Netherlands. The expected practical completion date for the development is 1 November 2024.

Development

The development of Ellesmere Port is on track to be completed by Dec 2023. 

Asset Enhancement Initiative

Facade replacement for Central Park is expected to be completed by 4Q 2024.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Below median by 10% or more
• REIT Manager's Shareholding: Below  median by 20% or more
• Directors of REIT Manager's Shareholding: Above median by 20% or more

Lease Profile

• Occupancy: ± 5% from median
• WALE: Above median by 10% or more
• Highest Lease Expiry within 5 Years: Below median by 10% or more; Falls in FY25
• Weighted Average Land Lease Expiry: Above median by 20% or more

Debt Profile

• Gearing Ratio: Below median by 20% or more
• Cost of Debt: Below median by 20% or more
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: ± 5% from median
• WADM: Below median by 10% or more
• Highest Debt Maturity within 5 Years: Below median by 20% or more; Falls in FY25
• Interest Coverage Ratio: Above median by 20% or more

Diversification Profile

• Top Geographical Contribution: Below median by 20% or more
• Top Property Contribution: Below median by 20% or more
• Top 5 Properties' Contribution: Below median by 20% or more
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: Below median by 10% or more
• Management Fees over Operating Distributable Income: Above median by 20% or more; $5.35 distribution for every dollar paid 
  
• Operating Distributable Income on Capital: ± 10% from median
• Operating Distributable Income Margin: Above median by 10% or more
• Operating Distribution Proportion: Below median by 10% or more

DPU Breakdown

• TTM DPU Breakdown:
• 78.4% from Operation
• 14.7% from Management Fees Paid in Units
• 0.7% from Income Support
• 6.1% from Proceeds from Divestment
• 0.1% from Release of Retention

Trends

• Uptrend: NAV per Unit, Interest Coverage Ratio
• Slight Downtrend: Committed Occupancy
• Downtrend: DPU from Operation, Property Yield, Operating Distributable Income on Capital, Operating Distributable Income Margin

Relative Valuation

• Dividend Yield: Above +1SD for 1y & 5y; Above +2SD for 3y
• P/NAV: Below -1SD for 1y, 3y & 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Sponsor's Shareholding
High Directors of REIT Manager's Shareholding	Low REIT Manager's Shareholding
Long WALE	Short WADM
Well Spread Lease Expiry	Low Property Yield
Long Weighted Average Land Lease Expiry	Low Operating Distribution Proportion
Low Gearing Ratio	Non Competitive Management Fees
Low Cost of Debt	DPU from Operation Downtrend
Well Spread Debt Maturity	Property Yield Downtrend
High Interest Coverage Ratio	Operating Distributable Income on Capital Downtrend
Low Top Geographical Contribution	Operating Distributable Income Margin Downtrend
Low Top Property & Top 5 Properties' Contributions
Low Top Tenant & Top 10 Tenants' Contributions
High Operating Distributable Income Margin
NAV per Unit Uptrend
Interest Coverage Ratio Uptrend

Compared to the previous half-year, NPI remains similar though there is a slight improvement in gross revenue. Nonetheless, DPU remains the same at 3.52 cents, despite an increase in finance costs and trust expenses, as well as a reduction in rental support. This is primarily attributable to higher distributions from divestment gains. For debt, about 25% of debt will be matured in the coming 12 months, with over 98% of it maturing in 2H FY24.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.