On 2nd November 2023, Frasers Logistics and Commercial Trust announced their 2HFY23 financial results. The Distribution Per Unit (DPU) declared for 2HFY23 was 3.52 cents, making the full year DPU for FY23 to be 7.04 cents.
Frasers Logistics and Commercial Trust makes up 9.84% of my stock portfolio. The FY23 full year DPU was lower than FY22. As a dividend investor, I am deeply concern. What attributed to the decrease?
Let us look into the details of Frasers Logistics and Commercial Trust’s financial results to find out more.
Frasers Logistics and Commercial Trust 2HFY23 Financial Results
In 2HFY23, revenue was lower mainly due to the weaker AUD/SGD exchange rates and lower average occupancies at Maxis Business Park and 357 Collins Street.
Finance cost was 29.7% higher because of increase in interest rates and additional borrowings drawn for capex and fund through developments.
As a result, Distributable income for 2HFY23 was correspondingly lower at S$131.6 million, from S$139.6 million in 2HFY22.
Thus, Distribution Per Unit (DPU) was 6.6% lower in 2HFY23 at 3.52 cents, from 3.77 cents in 2HFY22.
| 2HFY23 (S$’000) |
2HFY22 (S$’000) |
Change | |
| Gross Revenue | 212,801 | 214,517 | (0.8%) |
| Adjusted Net Property Income | 155,525 | 162,053 | (4.0%) |
| Finance Cost |
25,033 | 19,303 | 29.7% |
| Amount Distributable To Unitholders | 131,557 | 139,645 | (5.8%) |
| Distribution Per Unit (“DPU”) (cents) | 3.52 | 3.77 | (6.6%) |
Frasers Logistics and Commercial Trust FY23 Financial Results
If we look at the full year FY23 financial results, revenue was lower mainly due to the weaker AUD/SGD exchange rates and lower average occupancies at Farnborough Business Park, Maxis Business Park and 357 Collins Street.
In FY23, total finance cost was 12.4% higher because of increase in interest rates and additional borrowings drawn for capex and fund through developments.
The full year Distribution Per Unit (DPU) for Frasers Logistics and Commercial Trust fell 7.6% to 7.04 cents as compared to 7.62 cents in FY22.
| FY23 (S$’000) |
FY22 (S$’000) |
Change | |
| Gross Revenue | 420,782 | 450,187 | (6.5%) |
| Adjusted Net Property Income | 311,442 | 342,138 | (9.0%) |
| Finance Cost |
46,763 | 41,595 | 12.4% |
| Amount Distributable To Unitholders | 262,339 | 281,753 | (6.9%) |
| Distribution Per Unit (“DPU”) (cents) | 7.04 | 7.62 | (7.6%) |
Debt
As of 30th September 2023, Frasers Logistics and Commercial Trust’s aggregate leverage stood healthy at 30.2%.
There is no major refinancing due in 1HFY24. Over 98% of debt maturing in FY2024 is due in 2HFY24. Facilities are already in place for more than half of the debt maturing in FY2024.
77.2% of the borrowings are also hedged at fixed interest rates to mitigate against sudden interest rate hikes.
Occupancy
Overall portfolio occupancy stood at 96.0%. The occupancy for the Logistics and Industrial segment remains strong at 100% while the occupancy rate for Commercial segment continue to be weak at 89.9%.
Lease Expiry Profile
Leasing momentum was robust in 4QFY23, reducing FY2024 expiries by 1.2%, from 9.9% as at 30 June 2023. 6 industrial and 46 commercial leases due to expire in FY2024.
Current Dividend Yield
Based on the current share price of S$1.07 and FY23 full year distribution of 7.04 cents, this translate to a current dividend yield of 6.58%.
Summary of Frasers Logistics and Commercial Trust 2HFY23 Financial Results
Let me summarize the pros and cons based on Frasers Logistics and Commercial Trust FY23 financial results.
Pros
- Aggregate leverage stood healthy at 30.2%.
- No major refinancing due in 1HFY24.
- 77.2% of the borrowings are also hedged at fixed interest rates.
- Overall portfolio occupancy is healthy at 96.0%.
- Current dividend yield of 6.58%.
Cons
- Revenue was lower mainly due to the weaker AUD/SGD exchange rates.
- Lower average occupancies at Farnborough Business Park, Maxis Business Park and 357 Collins Street.
- Finance cost was higher in FY23.
- FY23 DPU fell 7.6% to 7.04 cents.