Frasers Logistics & Commercial Trust - CGS-CIMB Research 2021-08-05: Fairly Steady Quarter

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

Frasers Logistics & Commercial Trust - Fairly Steady Quarter




Frasers Logistics & Commercial Trust's 3QFY21 business update

  • In its 3QFY21 (Apr 2021 to Jun 2021) business update, Frasers Logistics & Commercial Trust (FLCT, SGX:BUOU) indicated that its overall portfolio occupancy stood at 96.3% as at end-3QFY21 (2QFY21: 96.8%). Its industrial/logistics (L&I) portfolio remained fully occupied, while its commercial portfolio saw a small slippage to a 91.8% take-up due to lower occupancy at Farnborough Business Park (FBP) and Blythe Valley Park (BVP).
  • In 3QFY21, Frasers Logistics & Commercial Trust renewed 74,865 sq m of leases (2.8% of its portfolio lettable area) at a +0.8% rental reversion. It granted S$1.1m in rental rebates for 9MFY21, comprising rental waivers and allowance for doubtful receivables due to COVID-19.
  • Frasers Logistics & Commercial Trust has a remaining 2% of gross rental income to be re-contracted in 4QFY21F and a further 9.8% in FY3/22F, of which 54% are from the L&I segment, by our estimates.


Positive portfolio rental reversions, retain high portfolio occupancy

  • 3Q rental reversions in the L&I portfolio averaged -2%. Australia continued to post negative reversions of 3.3% as step-up expansion outpaced market rental growth; this was moderated by a positive reversion of 3.7% in Europe.
  • Meanwhile, within the commercial segment, Singapore enjoyed positive reversions of 4%, while Australia renewals remained stable in 3QFY21. Commercial portfolio occupancy experienced some volatility in 3QFY21, as Fraser Business Park (FBP) saw a release of space by a tenant. Blythe Valley Park (BVP) experienced lower take up, but this was mitigated by in-place rental guarantees.
  • Frasers Logistics & Commercial Trust intends to undertake a £2m-3m asset enhancement at FBP to reposition the property as a Grade A building before re-leasing the property. We believe Frasers Logistics & Commercial Trust should be able to achieve a modest positive rental reversion post-AEI.


Healthy balance sheet to tap acquisition growth opportunities

  • Gearing stood at a healthy 36.4% as at end-3QFY1, with interest coverage ratio at 7x. Assuming a gearing level of 50%, Frasers Logistics & Commercial Trust has further debt headroom of ~S$1.9bn to tap inorganic growth opportunities.
  • Management indicated that it would look for acquisition growth opportunities from both its sponsor’s ROFR pipeline or via third-party acquisitions, particularly in Europe and the UK.

Reiterate ADD rating on Frasers Logistics & Commercial Trust






LOCK Mun Yee CGS-CIMB Research | EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-08-05
SGX Stock Analyst Report ADD MAINTAIN ADD 1.62 UP 1.570



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