Frasers Logistics and Industrial Trust Will Release Its Earnings Soon: Here’s What You Should Know

Frasers Logistics and Industrial Trust (SGX: BUOU), which held its initial public offering (IPO) in June 2016, is the first Singapore-listed REIT that focuses on Australian industrial properties.

On 25 January 2018, the REIT will be releasing its first quarter earnings for its fiscal year ending 30 September 2018 (FY2018). Let’s take a look at how it did in FY2017 to have a feel for what the REIT may report.

The table below shows the REIT’s actual income statement in FY2017 compared to its forecast (do note that FY2017 contains 15 months; it started from 20 June 2016):

Source: Frasers Logistics and Industrial Trust FY2017 earnings presentation

We can see that the REIT’s gross revenue, adjusted net property income, distributable income to unitholders, and distribution per unit all came in better than expected. The better top-line was mainly driven by four completed acquisitions and lower land tax expenses. As for the higher distribution income, it was due to a favorable exchange rate compared to the one used in the forecast.

The REIT also ended FY2017 with a high portfolio occupancy rate of 99.4%, and a healthy lease expiry profile.

Source: Frasers Logistics and Industrial Trust FY2017 earnings presentation

As you can see from the chart above, only 2.5% of Frasers Logistics and Industrial Trust’s leases will expire in FY2018. The REIT’s lease expiries are also well-staggered – there’s no single year, up to FY2025, in which more than 17% of its leases are expiring.

Next, let’s move on to Frasers Logistics and Industrial Trust’s tenant profile. You can see this in the chart below:

Source: Frasers Logistics and Industrial Trust FY2017 earnings presentation

There are two observations we can draw:

1. Firstly, the top 10 tenants of the REIT account for only 42% of its gross rental income. This seems reasonably diversified.

2. Secondly, Frasers Logistics and Industrial Trust’s tenants come from different industries. Similar to the first observation, the level of diversification in terms of industry seems reasonable too.

Lastly, let’s look at the comments the REIT gave in its earnings release regarding its market environment:

“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.”

If I put everything I’ve shared here about Frasers Logistics and Industrial Trust together, it appears that its business is in good shape. Will this translate into a good set of results when it announces its latest earnings update on 25 January 2018? We shall see.

We believe we’ve identified a REIT dividend dynamo whose financials are strong enough to qualify its dividend as “safe” – and have profiled this stock in a research report that’s now available to download completely free of charge. Simply click here to claim your copy today!

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