Frasers Logistics & Industrial Trust - CGS-CIMB Research 2019-11-06: Full Marks For Occupancy

FRASERS LOGISTICS & IND TRUST (SGX:BUOU) | SGinvestors.io FRASERS LOGISTICS & IND TRUST (SGX:BUOU)

Frasers Logistics & Industrial Trust - Full Marks For Occupancy

  • Frasers Logistics & Industrial Trust's 4QFY9/19 DPU of 1.73 Scts was broadly in line due to new acquisitions.
  • Occupancy boosted to 100% post quarter-end with new lease from Amazon.
  • Maintain ADD with a higher Target Price of S$1.31 to incorporate the full-year FY19 results, update our FX and Australian risk-free rate assumptions.



4QFY9/19 broadly in-line due to new acquisitions



100% occupancy as Amazon signs lease post quarter-end

  • For FY9/19, Frasers Logistics & Industrial Trust completed 122,554 sqm of leasing, representing 5.5% of gross lettable area and achieved a 91.2% tenant retention rate with an average reversion of -3.8% as portfolio rents continued to be higher than market rents.
  • Post quarter-end, Frasers Logistics & Industrial Trust signed a lease with Amazon to fill up its vacant space, which led to portfolio occupancy rising to 100%.
  • Demand-supply dynamics remain supportive, with take-up levels of c.2.3m sqm being above new supply of c.1.3m sqm; vacancy levels are at 5-year lows across key cities of Sydney, Melbourne and Brisbane. The strong investor demand for industrial space has also led to yield compression, with Frasers Logistics & Industrial Trust recording a A$101m revaluation gain.


Seeing the benefits of A$ cash rate cuts

  • Finance costs in 4QFY9/19 were 21.7% lower y-o-y due to interest savings from the refinancing of A$170m borrowings and the repayment of debt with divestment proceeds. In line with the declining A$ cash rate, Frasers Logistics & Industrial Trust’s weighted average interest rate was 2.2% (2.5% in 4QFY9/19).
  • Aggregate leverage declined to 33.4% from 35.4% although we think this could creep up slightly once the remaining two German acquisitions are completed. As of 30 Sep 2019, Frasers Logistics & Industrial Trust has a debt headroom of A$781m prior to reaching the 45% limit.


Maintain ADD as we raise our DDM-based Target Price to S$1.31






LOCK Mun Yee CGS-CIMB Research | Ervin SEOW CGS-CIMB Research | https://www.cgs-cimb.com 2019-11-06
SGX Stock Analyst Report ADD MAINTAIN ADD 1.31 UP 1.270



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