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Monday, November 29, 2021

Frasers Logistics & Commercial Trust Review @ 29 November 2021

Basic Profile & Key Statistics

Frasers Logistics & Commercial Trust (FLCT) is a diversified REIT that invests in the office, industrial, and logistic sectors. FLCT currently owns 103 properties across Australia, Singapore, Germany, England and Netherlands.

Performance Highlight

The performance has improved mainly due to contribution due to merger with Frasers Commercial Trust in April 2020 as well as acquisitions in 2021.

The average rental reversion is at -2.3% for 4Q FY21 and -1.7% for full year FY21.

In June, FLCT completed the acquistion of 6 freehold properties in Germany, Netherlands and U.K.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 21.046%
  • REIT manager's shareholding is low at 0.603%
  • Directors of REIT manager's shareholding is high at 3.298%

Lease Profile

  • Occupancy is slightly high at 96.2%
  • WALE is long at 4.8 years
  • Highest lease expiry within 5 years is low at 16.6% which falls in FY23
  • Weighted average land lease expiry is long at 88.77 years

Debt Profile

  • Gearing ratio is low at 33.7%
  • Cost of debt is low at 1.6%
  • Fixed rate debt % is moderate at 72.8%
  • Unsecured debt % is high at 86.6%
  • WADM is long at 3.4 years
  • Highest debt maturity within 5 years is low at 27.5% which falls in FY25
  • Interest coverage ratio is high at 7.3times

Diversification Profile

  • Top geographical contribution is low at 22.9%
  • Top property contribution is low at 7.7%
  • Top 5 properties contribution is low at 22.1%
  • Top tenant contribution is low at 4.8% 
  • Top 10 tenants contribution is low at 23.8% 
  • Top 3 countries contribution is from Australia, Germany and Singapore which contribute more than 85% of GRI

Key Financial Metrics

  • Property yield is slightly high at 5.3% 
  • Management fees over distribution is slightly high at 14.7% in which unitholders receive S$ 6.80 for every dollar paid 
  • Distribution on capital is slightly high at 4%
  • Distribution margin is high at 57.5%

Trends

Let's compare only for the period after the merger with Frasers Commercial Trust in 2Q 2020.
  • Uptrend - NAV per Unit, Interest Coverage Ratio
  • Slight Uptrend - DPU
  • Flat - Distribution on Capital, Distribution Margin
  • Slight Downtrend - Property Yield

Relative Valuation

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


Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
High Directors of REIT Manager's ShareholdingLow REIT Manager's Shareholding
Long WALE 
Well Spread Lease Expiry 
Long Weighted Average Land Lease Expiry 
Low Gearing Ratio 
Low Cost of Debt 
High Unsecured Debt % 
Long WADM 
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 Distribution Margin 
NAV per Unit Uptrend 
Interest Coverage Ratio Uptrend

FLCT performance has improved as compared to the previous half yearly result due to contribution from the 6 newly acquired properties in June. From the above table, FLCT fundamental is solid as usual. With the full contribution from the 6 newly acquire properties moving forward, FLCT performance is set to be improved further.


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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