Frasers Logistics & Commercial Trust (FLCT) has reported a distribution per unit (DPU) of 7.04 cents for the FY2023 ended Sept 30, 7.6% lower y-o-y. The REIT’s 2HFY2023 DPU stood at 3.52 cents, 6.6% lower y-o-y.
During the 2HFY2023, gross revenue dipped by 0.8% y-o-y to $212.8 million due mainly to the weaker Australian dollar (AUD) against the Singapore dollar (SGD) over the period and lower average occupancies at Maxis Business Park and 357 Collins Street.
Net property income (NPI) fell by 4.9% y-o-y to $157.1 million while adjusted NPI fell by 4.0% y-o-y to $155.5 million as property operating expenses rose from the higher energy and utility expenses. These were partly offset by the full six-month effect of the acquisition of four properties in Australia in 2HFY22 and full six-month contribution from the practical completion of the two logistics & industrial properties in the UK - Connexion II and Worcester.
Distributable income for the 2HFY2023 fell by 5.8% y-o-y to $131.6 million.
FY2023 gross revenue fell by 6.5% y-o-y to $420.8 million mainly due to the weaker exchange rates against the SGD, the divestment of Cross Street Exchange on March 31, 2022, as well as lower contributions from Farnborough Business Park, Maxis Business Park and 357 Collins Street.
Property operating expenses rose due mainly to higher energy and utility expenses.
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FY2023 NPI fell by 9.7% y-o-y to $315.0 million while adjusted NPI fell by 9.0% y-o-y to $311.4 million due to the higher expenses and offset by the full-year contribution of the acquisition of four properties in Australia in 2HFY2022 and contribution from the practical completion of Connexion II and Worcester.
Distributable income fell by 6.9% y-o-y to $262.3 million.
As at Sept 30, portfolio occupancy stood at 96.0%, with FLCT’s logistics and industrial portfolio maintained at full occupancy for four straight years. Portfolio weighted average lease expiry (WALE) stood at 4.3 years based on gross rental income (GRI).
During the period, FLCT saw positive rental reversions of 7.8% overall.
As at Sept 30, the REIT’s gearing stood at 30.2% with an interest coverage ratio of 7.1x. Its net asset value (NAV) stood at $1.17 for the period, down from $1.30 in the year before.
FLCT’s portfolio of 107 properties were valued at $6.4 billion as at Sept 30. This excludes the property under development in UK and the REIT’s right-of-use assets.
“Operating in the current economic climate remains challenging, as continued uncertainty around long-term rates and translation impact of our foreign sourced income placed pressure on FLCT’s financial performance in FY2023,” says Anthea Lee, CEO of the REIT manager.
“Notwithstanding, our strong logistics & industrial portfolio fundamentals remain steady. Coupled with our disciplined asset management and healthy financial standing, our investment focus remains to be in high-quality logistics & industrial assets, while we leverage our sponsor’s extensive network and capabilities for suitable investment opportunities. We will focus our attention on increasing our logistics & industrial exposure from the current 70% to 85% in the long term,” she adds.
On the acquisition of the logistics development in the Netherlands, Lee says that this has presented the REIT with a “unique opportunity” to acquire a “new, good quality asset” that is strategically located next to the Maastricht Airport, the country’s second largest air cargo hub.
“This acquisition further underscores our focus in strengthening our portfolio through accretive logistics & industrial acquisitions. The development also bears a ‘Very Good’ BREEAM (Building Research Establishment Environmental Assessment Method) rating that is aligned with FLCT’s sustainability focus,” she says.
Units in FLCT closed at $1.04 on Nov 1.
