Frasers Logistics & Commercial Trust - OCBC Investment 2021-05-07: Remains On A Solid Footing

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

Frasers Logistics & Commercial Trust - Remains On A Solid Footing




Frasers Logistics & Commercial Trust (FLCT)'s 1HFY21 results exceeded our expectations

  • Frasers Logistics & Commercial Trust (SGX:BUOU) reported a solid set of 1HFY21 results which beat our expectations. Gross revenue and adjusted NPI jumped 95.1% and 79.3% y-o-y to S$231.7m and S$173.9m, respectively. DPU grew 9.5% to 3.80 cents and accounted for 52.4% of our FY21 forecast.
  • Growth was driven largely by the consolidation of Frasers Commercial Trust for a full half year, contribution from acquisitions and favourable currency effects (stronger AUD and EUR relative to the S$).
  • Frasers Logistics & Commercial Trust only saw approximately S$1.2m of negative impact from the COVID-19 pandemic, and this was mainly due to concessions for its retail tenants in Singapore and Australia.


Seeing broad-based increase in leasing enquiries

  • Frasers Logistics & Commercial Trust’s portfolio occupancy stood at 96.8%, which was a slight decline of 0.4 percentage points (ppt) q-o-q. Its logistics & industrial portfolio remained fully occupied, but vacancies for its commercial portfolio rose 1 ppt to 7.4%. Notwithstanding this, we understand that Frasers Logistics & Commercial Trust has seen a broad-based increase in leasing enquiries for its commercial and business park assets (demand for logistics and industrial portfolio remains firm).
  • For Cross Street Exchange in Singapore, the level of enquiries has increased by 3-4x in the last 1-2 months as compared to 6-9 months ago for both its office and retail components, and management is optimistic of closing some leasing deals in the quarter, although rental reversions could be flattish to slightly negative. It also remains to be seen on how the recent spike in community COVID-19 cases and new restrictive measures would impact this leasing momentum.
  • In Australia, improvement in commercial leasing enquiries have also picked up, supported in part by a rebound in the resources sector, while higher enquiries in the Thames Valley in the UK was also observed, with flight to quality and desire for lower density the main drivers.
  • Overall portfolio rental reversions was flat at +0.1% in 2QFY21 (1QFY21: -6.9%), as positive rental reversions in Frasers Logistics & Commercial Trust’s commercial leases (Singapore: +3.7%; Australia: +9.9%) was offset by rental reversions of -3.6% for its Australian industrial portfolio.

Next major acquisition could come from business parks






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-05-07
SGX Stock Analyst Report BUY MAINTAIN BUY 1.62 UP 1.590



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