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Frasers Logistics and Industrial Trust’s Latest Earnings: What Investors Should Know

Frasers Logistics and Industrial Trust (SGX: BUOU), which went public on 20 June 2016, is an industrial real estate investment trust (REIT) with 61 Australian industrial assets in its portfolio. The REIT’s sponsor is Frasers Centrepoint Ltd (SGX: TQ5), one of Singapore’s largest property firms.

This morning, Frasers Logistics and Industrial Trust announced its financial results for the financial year ended 30 September 2017 (FY2017). The reporting period was from 20 June 2016 to 30 September 2017.

Here’s a quick rundown on the financial figures from the announcement:

1. Gross revenue for FY2017 was A$206.1 million, up 1.1% as compared to the initial public offering (IPO) forecast.

2. The industrial REIT achieved an adjusted net property income (NPI) of A$157.5 million, 0.8% above forecast.

3. Distribution per unit (DPU) was 8.85 Singapore cents, up from the forecasted 8.34 Singapore cents. The fourth quarter DPU of 1.77 Singapore cents surpassed the IPO forecast for the fifth consecutive quarter.

4. As of 30 September 2017, the net asset value per unit stood at S$0.94.

On 1 August 2017, the REIT acquired four completed properties, and these contributed to A$0.8 million of the adjusted NPI. Together with a lower land tax expense, the adjusted NPI was 0.8% higher than forecast. The positives, however, were partially offset by repairs and maintenance costs incurred and delay in the acquisition of the Martin Brower call option property.

Portfolio occupancy came in at 99.4%, as of 30 September 2017. The weighted average lease expiry was 6.75 years, and there are minimal lease expiries of 2.5% (by gross rental income) for FY2018. However, for the 12-month period ending 30 September 2017, average rental reversion was a negative 8.2%.

As of 30 September 2017, the trust had a gearing ratio of 29.3%, well below the regulatory limit of 45%. The weighted average cost of debt was 2.8% per annum, and there is no debt expiring in FY2018.

With regards to the outlook, the REIT said:

“Australian industrial supply is generally in line with the long-term average with development activity focused on the eastern seaboard cities of Sydney, Melbourne and Brisbane. Demand remains strong and developments are predominately leased prior to completion. Year-to-date gross take-up levels are above the 10-year average and this strong growth is largely attributable to the benefits of population growth, increased public infrastructure investment, tenant consolidations and activity driven by withdrawals from inner locations.

Australian investment activity has been characterised by a lack of on-market investment grade stock. Portfolio transaction levels remain strong and more than a third of the national sales volumes recorded in 2017 occurred in Sydney.”

Frasers Logistics and Industrial Trust opened for trading today at S$1.115. This translates to a price-to-book ratio of 1.2 and a distribution yield of 7.9%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.