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Frasers Logistics & Commercial Trust - DBS Research 2023-05-05: UK Development Projects Fully Leased

Frasers Logistics & Commercial Trust - UK Development Projects Fully Leased

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Frasers Logistics & Commercial Trust (SGX:BUOU) | SGinvestors.ioFrasers Logistics & Commercial Trust (SGX:BUOU)
  • Frasers Logistics & Commercial Trust (SGX:BUOU)'s 1H23 revenue and NPI were 11.7% and 13.4% lower y-o-y, mainly due to
    • divestment of Cross Street Exchange (on 31 March 2022). Capital distributions have been utilised to supplement some of the absence of income from CSE.
    • - Read this at SGinvestors.io -
    • Absence of early surrender fee from Farnborough Business Park (~S$2m in 1H22).
  • DPU for 1H23 was 3.52 cents, in line with our projections. Frasers Logistics & Commercial Trust's DPU includes capital distributions of ~S$9.6m in 1H23, mainly from coupon interest for ongoing development projects (~S$2.5m for Worcester and Ellesmere developments) and distribution of divestment gains (~S$4.3m), capital distribution from rental support (~S$1.4m) and lease incentives (S$1.3m)
  • - Read this at SGinvestors.io -
  • Commercial portfolio also reported an overall positive rental reversion; positive rental reversion in the UK offset the negative reversion for two small renewals in Singapore.
  • Total of 14 leases (~84,500 sqm) renewed in 2Q23. Only 3.4% of portfolio leases (by GRI) due to expire in 2H23. 2.3% from Commercial portfolio (UK, AU, SG), and 1.1% (AU, EU) from L&I portfolio. Portfolio occupancy rate remained stable at 95.9% (flat q-o-q).
  • Development projects in Blyth Valley Park and Worcester completed during the quarter, and will drive revenue growth going forward from 2H23.
  • Blythe Valley Park expansion completed and is 100% committed with three leases. One of the tenants was Tesla, which signed a 15-year lease. Total NPI contribution from the extension at BVP is ~GBP1.3m per annum. ROI on development is ~8.3%.
  • Worcester has been pre committed by a leading UK flooring distributor on a 15-year lease, with estimated annual NPI contribution of ~GBP1.1m.
  • Frasers Logistics & Commercial Trust's gearing remained low at 27.8%; debt headroom of more than S$3.1bn (until 50% gearing). Cost of borrowings inched up 10 bps q-o-q to 1.8%. ~76.2% of loans remains hedged to fixed rates.
  • Borrowing costs expected to continue inching up with rising interest rates. Only ~S$78m of loans remain to expire in 2H23, and the REIT has sufficient internal funds to repay this tranche of loans. ~S$527m in loans due to expire in June and August 2024 (EUR borrowings).
  • Every potential 50 bps increase in interest rates will lead to ~0.8% impact to Frasers Logistics & Commercial Trust's DPU.

    • Watching out for Google lease expiry at Alexandra Technopark (ATP)

    • Read more at SGinvestors.io.



    Above is an excerpt from a report by DBS Group Research.
    Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.



    Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-05-05


    Read also DBS's most recent report:
    2025-05-08 Frasers Logistics & Commercial Trust - Recalibrating For More Sustainable Earnings.

    Previous report by DBS:
    2025-02-06 Frasers Logistics & Commercial Trust - Focused On Core Earnings.

    Price targets by other brokers at Frasers Logistics & Commercial Trust Target Prices.

    Listing of research reports at Frasers Logistics & Commercial Trust Analyst Reports.

    Relevant links:
    Frasers Logistics & Commercial Trust Share Price History,
    Frasers Logistics & Commercial Trust Announcements,
    Frasers Logistics & Commercial Trust Dividend Payout Dates & Corporate Actions,
    Frasers Logistics & Commercial Trust News



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