Frasers Logistics and Industrial Trust (FLT) is a REIT which recently IPO-ed on the SGX-ST in Jun 2016. The Group is the first Singapore-listed REIT with an initial pure-play Australian industrial portfolio and has a portfolio of 51 Australian real estate assets focused in key regions within the country.
1. STOCK INFORMATION
TICKER SYMBOL: BUOU.SI
MARKET CAP: S$1.3 billion (2 Jul 2016)
MARKET PRICE / SHARE: S$0.80/share (11 Mar 2016)
INDUSTRY: Industrial REIT
2. THE BUSINESS
FLT owns a total of 51 Australian industrial properties upon IPO with an aggregate gross leasable area (GLA) of approxiamtely 1.2 million sqm. The appraised value of the portfolio is ~A$1.58 billion and was purchased by FLT for ~S$1.578 billion.
The properties are spread across 5 states in Australia:
1) Melbourne, Victoria – 25 properties
GLA – 548,058 sqm
Appraised Value – A$634.4 million
% of Portfolio – 40%
2) Brisbane, Queensland – 9 properties
GLA – 194,055 sqm
Appraised Value – A$449.2 million
% of Portfolio – 28.3%
3) Sydney, New South Wales – 12 properties
GLA – 361,532 sqm
Appraised Value – A$446 million
% of Portfolio – 28.2%
4) Adelaide, South Australia – 3 properties
GLA – 33,038 sqm
Appraised Value – A$36.6 million
% of Portfolio – 2.3%
5) Perth, Western Australia – 1 property
GLA – 20,143 sqm
Appraised Value – A$18.4 million
% of Portfolio – 1.2%
As at 1Q2016, the Group generated ~A$26 million of net property income (NPI) on A$30.7 million in gross revenues as compared to A$21.2 million of NPI on A$25.6 million gross revenues over a year earlier. Gearing ratio is conservative with total borrowings/total assets at 25.2%, which leaves significant headroom for FLT to increase leverage for expansion. MAS’s guideline currently allows 45% gearing limit for SG-listed REITs. Overall, its 51 properties command an average 98.3% occupancy rate with a weighted average lease to expiry (WALE) of 6.9 years which suggests a relatively stable recurring income base.
KEY STATISTICS - FY2015 (as at Dec 2015)
Gross Revenue: A$111 million
Net property income:A$92.3 million
Total Assets:A$1.65 billion
3. KEY OPPORTUNITIES
1. The Call Option Properties
The Group is granted “call options” to acquire up to 3 properties from Frasers Properties Australia (FPA), currently in development stages. The exercise date will take effect 6 months from the date of the IPO Prospectus. Upon completion of the development, the properties will have an aggregate GLA of ~70,740 sqm and appraised value of A$126.8 million. Fully committed leases from prospective tenants have been secured for the 3 properties and will be located across Victoria, Queensland and New South Wales
2. Further growth potential via Rights of First Refusal (ROFR) Properties
The sponsor of FLT has also granted the Group a ROFR on the Sponsor’s properties. Current pipeline include 9 existing completed assets (cumulative GLA of 147,285 sqm) and will allow FLT the potential to grow its distribution per unit (DPU). In addition, FPA also has an industrial property pipeline in Australia of ~A$850 million to be developed over the next 5 years and will give FLT the ROFR to acquire trhese properties when completed.
4. KEY RISKS
1. Concentration in one geographical location
The Group is a “pure-play” REIT in Australia industrial property market. An unexpected downturn in the sector or increased competition could result in adverse impact on property valuations and distributable income.
While the Group actively hedges its revenues, it is still exposed to FX risk if the AUD depreciates against the SGD.
4. LISTED PEERS
1) Mapletree Logistics Trust
2) Mapletree Industrial Trust
3) Cambridge Industrial Trust
5. INVESTOR RELATIONS
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