SINGAPORE (Feb 6): The manager of Frasers Logistics & Industrial Trust has declared a DPU of 1.74 cents for the 1Q ended Dec, exceeding forecasts by 6.1%.
The higher than expected DPU was due to interest savings from a lower actual weighted average interest rate of 2.8% per annum, compared to a forecast weighted average interest rate of 3.4% per annum.
Gross revenue for the quarter was A$39.7 million ($42.9 million), 1.5% below the forecast of A$40.3 million, due to a delay in exercising and acquiring the Martin Brower call option property to Nov 30 from October 1.
Correspondingly, adjusted Net Property Income (NPI) was A$30.7 million, 0.6% lower than forecast. The lower property operating expenses, a 14.5% decrease in actual trust expenses, and interest savings translated to the higher DPU.
As at Dec 31, the total value of FLT’s portfolio increased by 8.8% since IPO to A$1.74 billion.
FLT proactively engages with tenants prior to lease expiry and 56,108 sqm of new lease and lease renewals, representing 4.5% of total Portfolio GFA, were executed in the quarter.
The portfolio’s occupancy has improved to 99.3% as at Dec 31, up from 98.3% at listing. The portfolio enjoys a long WALE of 6.9 years, with no concentration risk of lease expiry, with only 0.6% of its leases (by gross rental income) expiring during the year ending Dec 31 2017, thereby providing stability of cash flows.
On Nov 30, FLT completed the acquisition of the Martin Brower property in Sydney. This is a prime, new industrial facility with a 20-year lease, the longest in FLT’s portfolio. As at Dec 31, FLT’s aggregate leverage remains low at 29.7%, providing FLT with available debt headroom for growth.
The recent establishment of a $1 billion multicurrency debt issuance programme in Oct also provides FLT with flexibility in its financing options. Total borrowings stood at A$540 million, 78% of which are hedged. The weighted average interest rate for borrowings for the quarter was 2.8% per annum.
In its outlook, management expects FLT to meet the FY2017 DPU Forecast of 6.50 cents which translates to an attractive yield of 6.84%.
In a morning note, the research team from Lim & Tan Securities says: “We continue to like to long and strong visibility of FLT’s income stream, underpinning its stable and sustainable dividend payments. Its low gearing of 29.7% allows significant headroom to take on debt for DPU accretive acquisitions. We maintain our BUY rating on FLT.”
Units of FLT are trading 1 cent higher at 96 cents.
