On 30th January 2024, Frasers Logistics and Commercial Trust announced their 1QFY24 Business Updates. Since this a business update, the announcement mainly touches on operational performance with minimal updates on financial performance.
If you are not familiar with Frasers Logistics and Commercial Trust, this logistics REIT giant has an established foothold in five developed countries. The countries are Australia, Germany, The UK, The Netherlands and Singapore. Also, Frasers Logistics and Commercial Trust forms my second largest holding in my Stock Portfolio.
As you can see from the above key highlights, the operational performance of Frasers Logistics and Commercial Trust is fairly stable. It has a strong portfolio rental reversion of 11.6%. Portfolio occupancy is also stable at 95.8%.
In terms of debt, Frasers Logistics and Commercial Trust’s aggregate leverage stood pretty low at 30.7% with a significant debt headroom at $1.1 billion. It is fortunate the manager parred down its debt in the early stages of several interest rate hikes.
76.8% of Frasers Logistics and Commercia Trust’s borrowings are pegged at fixed interest rates to mitigate against sudden interest rate hikes.
Frasers Logistics and Commercial Trust 1QFY24 Debt
Even though Frasers Logistics and Commercial Trust’s aggregate leverage is low at 30.7%, it is important to note that over 95% of its debt is due in FY2024. The manager has shared that facilities are already in place or available for more than half of the debt maturing in FY2024.
If you notice the chart below, the bulk of Frasers Logistics and Commercial Trust’s debt will be maturing in FY2024, FY2025 and FY2026. Despite the assurance that facilities are in place, I will still watch out for the debt maturity in subsequent quarters.
As usual, the occupancy for its Logistics and Industrial sector achieved a perfect score of 100%. The Commercial portfolio continue to underperform.
As you can see from the breakdown below, occupancy fell slightly for 357 Collins Street (Australia) and Famborough Business Park (UK) as compared to the previous quarter.
Lease Expiry Profile
Frasers Logistics and Commercial Trust‘s lease expiries remained well spread. Positive leasing momentum in 1QFY24 reduced FY2024 expiries from 8.7% as at 30th September 2023 to 7.0% as at 31st December 2023.
The Weight Average Lease Expiry (WALE) for Frasers Logistics and Commercial Trust’s Logistics and Industrial Portfolio and Commercial Portfolio stood at 5.1 years and 3.1 years respectively.
Summary of Frasers Logistics and Commercial Trust 1QFY24 Business Updates
Based on the business updates, the pros are
- Positive rental reversion of 11.6%.
- Portfolio occupancy is stable at 95.8%.
- Low aggregate leverage at 30.7%.
- 76.8% of borrowings at fixed interest rates.
- Well spread lease expiry.
The cons are
- Over 95% of its debt is due in FY2024.
- Commercial portfolio continue to underperform.