Frasers Logistics & Commercial Trust Review @ 21 May 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): 107

Key Indicators

Performance Highlight

Gross revenue, NPI, distributable income and DPU declined YoY mainly due to mainly loss of income from Cross Street Exchange which was divested on 31 March 2022 and lower exchange rate for f AUD, EUR and GBP against the SGD.

Rental Reversion

Rent reversion for the latest quarter is at 3.6% for incoming vs outgoing and 23.2% for average vs average.

Development

The development of Ellesmere Port is targeted to be completed by Dec 2023. Whereas for Blythe Valley Park and Worcester, the development has been completed.

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: ± 10% from median; 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 %: ± 10% from median
• WADM: Below median by 10% or more
• Highest Debt Maturity within 5 Years: Below median by 10% 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: ± 10% from median
• Management Fees over Operating Distributable Income: ± 10% from median; $5.56 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:
• 80.6% from Operation
• 14.5% from Management Fees Paid in Units
• 1.2% from Income Support
• 3.6% from Proceeds from Divestment
• 0.1% from Release of Retention

Trends

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

Relative Valuation

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

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low REIT Manager's Shareholding
High Directors of REIT Manager's Shareholding	Short WADM
Long WALE	Low Operating Distribution Proportion
Long Weighted Average Land Lease Expiry	Property Yield Downtrend
Low Gearing Ratio	Operating Distributable Income on Capital Downtrend
Low Cost of Debt
Well Spread Debt Maturity
High Interest Coverage Ratio
Low Top Geographical Contribution
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

Performance has declined as compared to the previous half-year due to lower income arising from lower exchange rates against SGD, higher borrowing costs, and reduced income support and divestment proceeds. Only 3.9% of debts will expire by 2H FY23 and the proportion of fixed-rate debt is at 76.2%, close to the SREITs median level. Although the gearing ratio is low, it is unclear if any acquisitions will be pursued in the near future to enhance the DPU back to the previous year's levels.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and detail of Singapore REIT

REIT Review - List of previous REIT review posts

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*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 own findings and should not be considered as 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.