Frasers Logistics and Industrial Trust Declares DPU of 1.76 cents for 2QFY19

Frasers Logistics and Industrial Trust currently makes up 14% of my stock portfolio and 20% of my wife’s stock portfolio.

On 26th April 2019, Frasers Logistics and Industrial Trust announced their 2QFY19 financial results. The manager has declared a Distribution Per Unit (“DPU”) of 1.76 cents. This was a 2.8% decline as compared to 1.80 cents in 2QFY18. If we looked at the Distribution Per Unit (“DPU”) in Australian cents, the Distribution Per Unit (“DPU”) was 1.82 cents as compared to 1.70 cents in 2QFY18 which was 7.1% higher.

The reason for lower Distribution Per Unit (“DPU”) in Singapore cents was because of the softening of AUD and EUR against the SGD. The exchange rate was A$1.00: S$0.9666 (2QFY18: A$1.00:
S$1.0647). Foreign exchange risk is one key risk when investing in Frasers Logistics and Industrial Trust and I am fully aware of this risk prior to investing.

Occupancy

Frasers Logistics and Industrial Trust’s portfolio remained at near full occupancy of 99.6%, with a weighted average lease expiry (“WALE”) by gross rental income (“GRI”) of 6.71 years. I liked the annual average rent increment baked into its Australia assets.

As of 31 March 2019 Australia Europe Total
Number of properties 60 22 82
WALE 6.43 years 7.08 years 6.61 years
Occupancy Rate 99.4% 100% 99.6%
Annual Average Rent Increment 3.1% CPI-linked/ Fixed N.A

Debt

As of 31st March 2019, Frasers Logistics and Industrial Trust’s aggregate leverage was 35.1%. This was 0.5% down from 35.6% as compared to 1QFY19. The average weighted debt maturity is 2.4 years.

2QFY19 Financial Results

2QFY19
(A$’000)
2QFY18
(A$’000)
Change
Gross Revenue 59,666 43,575 36.9%
Net Property Income 47,866 33,414 43.3%
Distributable Income 36,909 25,866 42.7%
Distribution Per Unit (“DPU”) (Australian cents) 1.82 1.70 7.1%
Distribution Per Unit (“DPU”) (Singapore cents) 1.76 1.81 (2.8)%

Last but not least, it was interesting to know from the presentation slides that E-commerce can be a driver of global logistics market.

  • E-commerce is a key driver behind the development of the global logistics market, which is boosting demand for Logistics and Industrial properties and encouraging new project developments
  • Online retail sales (as percentage of total retail sales) is expected to grow exponentially in the years to come
  • Very strong demand growth has cut the availability of large-scale modern warehouse space, producing capacity constraints in several major logistics hubs globally
  • Growing customer expectations for same-day and same-hour delivery are forcing an increasing number of courier, express and parcel service providers to seek new centres for last mile city distribution.