On 1st February 2023, Frasers Logistics and Commercial Trust released their 1QFY23 business updates. Since it is a business update, the focus is on debt, occupancy and lease expiries.
It is also noteworthy that Frasers Logistics and Commercial Trust has 3 ongoing projects Connexion II, Worcester and Ellesmere Port when completed in 2023 and leased out will contribute to its overall revenue.
Now, let us look into details on Frasers Logistics and Commercial Trust’s 1QFY23 business updates.
Debt
As of 31st December 2022, the aggregate leverage stood at 27.9% and Average Weighted Debt Maturity is 2.7 years. The aggregate leverage is considered to be at low levels and there is a lot of room for further debt to fund acquisitions if any.
78.7% of Frasers Logistics and Commercial Trust borrowings are based on fixed rates to mitigate against fluctuating interest rates and sudden hikes.
The debt maturity is considered well spread and Frasers Logistics and Commercial Trust has sufficient internal funds and facilities to refinance or repay the debt maturing in FY2023.
If you look at the above chart, FY2024 borrowings are maturing in June and August 2024. Frasers Logistics and Commercial Trust’s management has commenced discussion with banks on refinancing options.
Occupancy
As of 31st December 2022, Frasers Logistics and Commercial Trust’s overall portfolio occupancy stood at 95.9%.
The occupancy for the logistics and industrial segment stood strong at 100%, dragged down by the commercial segment’s occupancy at 89.8%.
Lease Expiry
The portfolio reversion stood positive at 11.0%. A positive reversion means that Frasers Logistics and Commercial Trust managed to achieve an increase in rental rates.
Frasers Logistics and Commercial Trust has been active in renewing their leases in 1QFY23, reducing FY2023 expiries to 4.7%, from 10.0% as at 30 September 2022. Thus, only 6 industrial and 34 commercial leases are due for renewal in FY2023.
Current Dividend Yield
Based on the current share price of S$1.32 and FY22 distribution of 7.62 cents, this translate to a current dividend yield of 5.77%.
The current dividend yield is still attractive despite the share price has moved up.
Summary of Frasers Logistics and Commercial Trust 1QFY23 Business Updates
To summarize the business updates, the positives are
- Low aggregate leverage at 27.9%
- Positive rental reversion at 11.0%
- Only 4.7% lease expiries in FY2023
- Overall portfolio occupancy stood at 95.9%
- Attractive current dividend yield at 5.77%
There is only 1 item which I consider a negative which is the low commercial segments occupancy at 89.8%. This is because Maxis Business Park (MBP)’s occupancy was impacted by three tech related tenants which either downsized or vacated the property.