Frasers Logistics & Industrial Trust, Frasers Commercial Trust - CGS-CIMB Research 2019-12-03: Propose Merger

FRASERS LOGISTICS & IND TRUST (SGX:BUOU) | SGinvestors.io FRASERS LOGISTICS & IND TRUST (SGX:BUOU) FRASERS COMMERCIAL TRUST (SGX:ND8U)

REITs - Frasers Logistics & Industrial Trust, Frasers Commercial Trust Propose Merger




Proposed merger of FLT and FCOT and asset acquisition



S$0.151 cash + 1.233 new FLT units for FCOT unitholders



Impact of the deals

  • The deals will be DPU accretive on a pro-forma FY19 basis to both Frasers Logistics & Industrial Trust and Frasers Commercial Trust unitholders by 2.2%/4.2%, respectively, based the Managers’ estimates. Stripping out the acquisition of Farnborough Business Park, the pro-forma FY19 DPU accretion from the merger alone would be 0.6%/2.5% respectively.
  • The enlarged Frasers Logistics & Industrial Trust entity could have a market cap and free float of S$4.2bn/S$3.0bn respectively, according to the Managers, which would put it amongst the top-10 S-REITs by market cap and free float. This could lead to an increase in its weightage in the FTSE EPRA/NAREIT Index, resulting in higher trading liquidity and possibly a wider investor base.
  • The larger Frasers Logistics & Industrial Trust portfolio size also enhances diversification and portfolio resilience as its exposure by value to any single asset and geography will be lower than 12%/50% respectively. Its exposure to top-10 tenants by gross rental income would also be lowered to 24% on a pro-forma basis. Meanwhile, potential debt headroom could increase to S$868m, based on a 45% ceiling. Introducing an S$-denominated income source could also lower Frasers Logistics & Industrial Trust’s exposure to FX volatility.
  • Post-merger, Frasers Logistics & Industrial Trust’s functional currency would be changed to S$ and FLT would close the counter trading in A$.


Maintain ADD on both FLT and FCOT






LOCK Mun Yee CGS-CIMB Research | Ervin SEOW CGS-CIMB Research | https://www.cgs-cimb.com 2019-12-02
SGX Stock Analyst Report ADD MAINTAIN ADD 1.310 SAME 1.310
ADD MAINTAIN ADD 1.710 SAME 1.710



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