I will like to share my personal analysis of Frasers Industrial Thailand REIT.
Frasers Industrial Thailand REIT (FREIT) is an Industrial and Logistics Trust established on 12th December 2014 to manage industrial and logistics properties throughout Thailand with gross leasable area of approximately 2.03 million square metres. It is currently the biggest industrial and logistics REITs in Thailand.
Frasers Industrial Thailand REIT manages an estimated of 636 units that are widely scattered in 30 industrial and logistics prime areas in Thailand with a total property fair value of 44,137.5 million Baht.
Frasers Industrial Thailand REIT is listed on the Stock Exchange of Thailand (SET) whereby the initial date of trading was 9 January 2015.
Frasers Industrial Thailand REIT Portfolio
Frasers Industrial Thailand REIT’s investment portfolio comprises of 636 units of factories and warehouses. These units are high-quality properties strategically located in key industrial areas of Thailand such as Ayutthaya, Pathum Thani, Samut Prakan, Prachinburi and the Eastern Economic Corridor (EEC).
Let us look at the properties in more details.
| Project | Freehold | Leasehold | No. of units | Net leasable area (sq.m.) |
| Factory | 337 | 863,885 | ||
| Bangpa-in Industrial Estate | 100% | – | 15 | 32,300 |
| Hi-Tech Industrial Estate (Ban Wah) | 88% | 12% | 40 | 111,828 |
| Rojana Industrial Park | 92% | 8% | 61 | 145,732 |
| Navanakorn Industrial Promotion Zone | 91% | 9% | 23 | 56,500 |
| Bangpoo Industrial Estate | 100% | – | 13 | 40,325 |
| Amata City Chonburi Industrial Estate | 90% | 10% | 103 | 271,225 |
| Amata City Rayong Industrial Estate | 78% | 22% | 38 | 100,400 |
| Hemraj Industrial Estate (Bowin) | 100% | – | 3 | 7,200 |
| Pinthong Industrial Estate (Project 1) | 100% | – | 19 | 39,250 |
| Pinthong Industrial Estate (Project 2) | 59% | 41% | 9 | 21,025 |
| Pinthong Industrial Estate (Project 3) | 87% | 13% | 13 | 38,100 |
From the above, there is one interesting thing I have found. In Thailand, some industrial complexes are called “industrial estates”, whereas others are called ‘”industrial parks”. Do you know the differences?
The term “industrial estate” can only be used by estates belonging to or jointly developed with the Industrial Estate Authority of Thailand (IEAT). IEAT is a state enterprise established by the Ministry of Industry to develop more planned and regulated industrial complexes.
Under IEAT, the customers can enjoy special privileges like consolidated, efficient document processing and perhaps most importantly, the right to 100% foreign ownership of land. As you can see, a lot of properties under Frasers Industrial Thailand REIT is termed “industrial estate”. This reflects the underlying quality of the assets which in turn attracts investors.
| Project | Freehold | Leasehold | No. of units | Net leasable area (sq.m.) |
| Warehouse | 299 | 1,166,511 | ||
| Frasers Property Logistic Center (Rojana) | 100% | – | 3 | 18,324 |
| Frasers Property Logistic Center (Wang Noi 1) | 100% | – | 13 | 67,306 |
| Frasers Property Logistic Center (Wang Noi 2) | 100% | – | 8 | 19,600 |
| Cold Storage (CTD) | 100% | – | 1 | 18,354 |
| Frasers Property Logistic Center (Bangplee 1) | – | 100% | 10 | 76,477 |
| Frasers Property Logistic Center (Bangplee 2) | – | 100% | 9 | 124,634 |
| Frasers Property Logistic Center (Bangplee 3) | – | 100% | 28 | 106,692 |
| Frasers Property Logistic Center (Rojana Prachinburi) | 100% | – | 8 | 14,832 |
| Frasers Property Logistic Center (Bangna) | 31% | 69% | 82 | 258,260 |
| Frasers Property Logistic Center (Amata City) | 100% | – | 7 | 19,650 |
| Frasers Property Logistic Center (Sriracha) | 100% | – | 22 | 99,789 |
| Frasers Property Logistic Center (Phan Thong) | 100% | – | 5 | 10,600 |
| Frasers Property Logistic Center (Laemchabang 1) | 100% | – | 21 | 69,404 |
| Frasers Property Logistic Center (Laemchabang 2) | 100% | – | 26 | 81,700 |
| Frasers Property Logistic Center (Laemchabang 3) | 100% | – | 24 | 80,012 |
| Frasers Property Logistic Center (Eastern Seaboard 1 A) | 100% | – | 7 | 35,430 |
| Frasers Property Logistic Center (Eastern Seaboard 1 B) | 100% | – | 12 | 28,968 |
| Frasers Property Logistic Center (Eastern Seaboard 2 A) | 100% | – | 4 | 15,800 |
| Hemraj Industrial Estate (Bowin) | 100% | – | 9 | 20,700 |
Many of the warehouses such as Frasers Property Logistic Centers are located near the Suvarnabhumi Airport, Bangkok Port and Laemchabang Deep Seaport.
The assets are strategically located in prime locations either near seaports or airport.
Occupancy
As of Q2FY21, the average portfolio occupancy stood at 86.3%. In my opinion, the occupancy is still not at optimum levels as my expectation is above 90%. Nevertheless, I can see that overall portfolio occupancy is improving as compared to the 1st quarter of 2021.
The tenant base is well-diversified with no single tenant accounting for more than 10.0% of portfolio Gross Rental Income (GRI).
It is noteworthy that 30% of the tenants are from the Logistics sector and 41% of the tenants are Japanese.
Weight Average Lease Expiry (WALE) stood at 2.1 years. Unless a step up rent component is incorporate in, I consider the WALE to be rather short.
Financial Summary
If we compare the gross revenue in 1H2021 and 1H2020, it grew by 10% to $1,674 million baht.
I realise Frasers Industrial Thailand REIT like to use Net Investment Income instead of Net Property Income which is commonly used in Singapore REITs. There is a difference between Net Investment Income and Net Property Income.
Net Property Income is the Gross Revenue of a Property minus the Property Related Expenses such as building maintenance etc.
Net Investment Income refers to income receive from investment assets such as stocks, bonds, funds and property before taxes are accounted for.
In the case of Frasers Industrial Thailand REIT, I am uncertain if all income comes solely from the leasing of its property as I could not find any information about it. I prefer investment income to be differentiated from property leasing income so that I can better evaluate the worth of its properties.
| 1H2021 THB million | 1H2020 (THB million) | Change | |
| Gross Revenue | 1,674 | 1,674 | 10.0% |
| Net Investment Income | 1,155.9 | 997 | 15.9% |
| Distributable Income | 1,146 | 1,001 | 14.0% |
| Distribution Per Unit (“DPU”) (baht) | 0.3360 | 0.334 | 0.6% |
Distribution History
The distribution per unit for each quarter is rather consistent. In my opinion , DPU growth is lack lustre with only 0.6% year-on-year.
Debt
As of 31st December 2020, gearing ratio stood at low level of 26.1%.
There is still a huge debt headroom of THB 15,433.0 million. This means there is plenty of room for further acquisitions.
Management
The first thing I wish to highlight is that Frasers Industrial Thailand REIT has a good sponsor which is Frasers Property (Thailand) Public Company Limited (FPT).
The following is extracted directly from Frasers Property Industrial REIT website.
Mr. Peerapat Srisukont is the Director and Managing Director. Mr Peerapat has been Managing Director of Frasers Property Industrial REIT Management (Thailand) Co., Ltd. since August 2016.
As Managing Director, he oversees overall operations of the REIT manager, sets the strategic objectives for Frasers Industrial Thailand REIT, create engagement with stakeholders and gives advice to management. He reports the operations of Frasers Industrial Thailand REIT to The Board of Directors of the REIT Manager.
He has more than 20 years’ experience in Industrial and logistics property management. He oversaw the conversion of three property funds, TFUND, TLOGIS and TGROWTH, into Frasers Industrial Thailand REIT, making Frasers Industrial Thailand REIT become “the largest industrial and logistics REIT in Thailand”.
Current Valuation
Based on FY20 Distribution Per Unit (DPU) of 0.6690 baht and current share price of 14.10 THB, this translate to a current dividend yield of 4.74%.
Are we late in the game already? If we bought at 12 baht 3 months ago, this will give us a dividend yield of 5.58% which is still satisfying for a dividend investor.
Summary of My Analysis of Frasers Industrial Thailand REIT
Personally, I felt that this is a quality REIT whereby you are focusing on investing in Thailand’s Industrial and Logistics assets.
You might ask me “Why Thailand?” In my opinion, Thailand is an unexplored territory whereby there is a lot of value that can be unlocked there.
For example, the rising cost of electricity and leases in Singapore have driven companies to setup their factories and warehouses elsewhere. Thailand provided such matching conditions such as cheaper electricity and land leases as compared to Singapore.
In summary, the positives of Frasers Industrial Thailand REIT are
- It is the biggest industrial and logistics REITs in Thailand.
- The assets are strategically located in prime locations either near seaports or airport.
- Underlying quality of the assets under IEAT attracts investors.
- Huge debt headroom of THB 15,433.0 million. This means there is plenty of room for further acquisitions.
What I did not like about Frasers Industrial Thailand REIT are
- Low average portfolio occupancy rate of 86.3%.
- Short WALE of 2.1 years.
- Low current dividend yield of 4.74% at share price of 14.10 THB.
- Low Distribution Per Unit (DPU) growth of 0.6% year-on-year
That is all folks and I hope you like my personal analysis of Frasers Industrial Thailand REIT!
I wouldn’t touch anything in Thailand.
Corruption is rife at all levels, the junta is here to stay under an absolute monarchy.
It’s a high risk, low return investment with far better options in Singapore.
Thailand is somewhere to go for a holiday, not to invest.
Hi Baloo, political stability is one of the risks when investing in overseas market.