FRASERS Logistics & Commercial Trust : BUOU +0.7% (FLCT) recorded 173,087 square metres (sq m) of leasing across its portfolio in Q3 ended June, the real estate investment trust&rsquo s (Reit) manager said in a Friday (Aug 5) business update.

 

Amid this &ldquo healthy leasing momentum&rdquo , FLCT maintained 100 per cent occupancy for its logistics and industrial (L& I) portfolio, with no expiries in Q4, it added. The commercial portfolio recorded a 91.3 per cent occupancy rate, with 0.9 per cent of income expiring in Q4. Overall occupancy came in at 96.5 per cent.

 

Aggregate leverage stood at 29.2 per cent as at end-June, down 3.9 percentage points from end-March, with cost of borrowings at 1.6 per cent. It has an average weighted debt maturity of 3 years, with refinancing of S$10 million in Q4.

 

FLCT acknowledged the challenging operating environment. The weakening of the Australian dollar, euro and British pound against the Singapore dollar has impacted the Reit&rsquo s foreign-sourced income. On the interest rate front, every potential 50 basis-point increase in rates on variable rate borrowings is estimated to impact distribution per unit by 0.05 Singapore cent.

 

Volatile energy costs and inflationary pressures are further expected to place pressure on recovery and growth sentiment, FLCT said. It is also monitoring the impact of the Russia-Ukraine conflict on Europe operations, which have thus far been largely unaffected.

 

That said, the Reit also added that the &ldquo overall operating environment is expected to further improve with strong tenant activity observed, as countries continue to adopt an endemic approach to living with Covid-19 with a progressive return towards normalcy&rdquo .

 

Looking ahead, FLCT has committed S$118.8 million for the acquisition of a suburban office and 3 L& I assets in Australia. Another S$171.7 million is for a forward-funding L& I acquisition in the UK.

 

THE manager of Frasers Logistics & Commercial Trust (FLCT) announced on Saturday (Jun 25) that it has acquired a freehold logistics development in the UK for a total consideration on a completed basis of £ 101 million (S$171.7 million).

 

The forward funding investment will see FLCT fund the development of the new facility by seller Stoford Properties, a UK developer specialising in industrial, production and logistics facilities.

 

The maximum consideration, which is in line with an independent valuation conducted by CBRE as at Jun 1, includes the cost of development.

 

Located within the Hooton Business Park in Cheshire in north-west England, the property will sit on a 14.4 ha site and will have a total lettable area of 667,185 sq ft.

 

Development of the property is expected to be completed in the second half of 2023.

 

It will then be leased to Peugeot Motor Company for a lease term of 15 years with 5-yearly, upward-only rent reviews. The property will serve as Peugeot&rsquo s national distribution centre in the UK.

 

&ldquo The forward funding acquisition presents an excellent opportunity to add a state-of-the-art logistics facility to FLCT&rsquo s growing UK logistics and industrial portfolio,&rdquo said Robert Wallace, chief executive officer of the Reit manager.

 

&ldquo The property will mark FLCT&rsquo s fourth logistics and industrial investment in the UK and is strategically sited in a well-established logistics and industrial precinct in UK&rsquo s North West, which will enable us to deepen FLCT&rsquo s presence in the attractive UK logistics real estate space, while supporting our objectives of delivering sustainable long-term value to our unitholders,&rdquo he added.

 

The acquisition will be FLCT&rsquo s sixth property in the UK and will increase the real estate investment trust&rsquo s (Reit) exposure in the UK market to 13 per cent of its total portfolio value, up from 10.7 per cent previously.

 

The weighting of FLCT&rsquo s portfolio by value towards logistics and industrial assets will grow to 67.1 per cent, from 66.3 per cent.

 

Weighted average lease expiry will increase to 4.8 years from 4.6 years, with a portfolio occupancy rate of 96.2 per cent.

 

Including the acquisition fee payable to the Reit manager as well as professional and other fees and expenses, the total cost of the proposed acquisition is estimated to be £ 103.5 million.

 

The Reit manager said the acquisition will be funded through the proceeds of its divestment of Cross Street Exchange in Singapore and existing debt facilities.

 

It added that the acquisition is not expected to have any material effect on FLCT&rsquo s net tangible assets.

 

Frasers Logistics & Commercial Trust (FLCT) plans to acquire a fully-leased freehold suburban commercial property in Victoria, Australia for A$60.25 million (about S$58.4 million).

 

In a filing to the Singapore bourse on Thursday, FLCT said that the purchase price took into consideration an independent valuation of A$60.25 million conducted by consultancy CIVAS (VIC) as at April, 30, 2022. The deal is slated for completion on May 20.

 

Located at Blackburn Road, Mount Waverley, the building sits in the heart of the City of Monash. Completed in November 2016, the five-storey, A Grade suburban office building has a total net lettable area of 7,297 square metres (sq m) comprising two retail tenancies on the ground level and four upper levels of office space. It is fully leased to nine tenants with a weighted average lease expiry (WALE) of about five years, as at March 31, 2022.

 

FLCT said the total cost of the building will work out to A$65 million, including stamp duty as well as other fees and expenses linked to the deal.

 

The acquisition will be funded from the divestment proceeds of Cross Street Exchange in Singapore. In January, FLCT announced the divestment of its remaining leasehold interest in the mixed-use commercial property for S$810.8 million.

 

Robert Wallace, chief executive officer of the REIT&rsquo s manager, said: &ldquo With the property being 100 per cent leased to reputable tenants in diverse industries, the acquisition is expected to further enhance FLCT&rsquo s quality tenant mix and portfolio metrics, while providing unitholders with a stable income stream.&rdquo

 

The property will be FLCT&rsquo s fourth commercial asset Down Under, boosting its exposure to the Australian market to 51.8 per cent of its total portfolio value, from 51.3 per cent previously. Post acquisition, its portfolio occupancy rate will edge up from 96.1 per cent to 96.2 per cent, with a WALE of 4.6 years.

 

FLCT highlighted that Melbourne&rsquo s south-eastern office market recorded a positive net absorption of 1,684 sq m in Q1 2022, underpinned by positive relocation activity from large tenants. It said: &ldquo Occupier demand is expected to be positive with recovery post-Covid-19 in the Melbourne south-eastern office market. Thus, the manager is of the view that good quality buildings continue to be the preferred products in this market as flight to quality opportunities arise.&rdquo

 

THE Covid-19 pandemic has dented Frasers Logistics & Commercial Trust' s distributable income (FLCT) Frasers L& C Tr: BUOU -0.71% by about S$0.2 million for Q1 2022, but this has not been material to the real estate investment trust (Reit), said its manager in a business update on Monday (Feb 7).

 

The figure comprises mainly rental waivers and allowance for doubtful receivables attributable to the pandemic.

 

There has also been " no material impact" to FLCT' s porfolio to date, with only the retail segment of its commercial portfolio being " more challenged" . This segment represents about 1.7 per cent of FLCT' s overall income.

 

" Structural changes driven by the growth of e-commerce activities and ' hub-and-spoke' trend are expected to drive demand for logistics and suburban office spaces, respectively," FLCT' s manager said.

 

FLCT logged 69,274 sq m of leasing for Q1 2022, and overall portfolio reversion was down 1.6 per cent on an incoming versus outgoing basis.

 

Occupancy rate stood at 100 per cent for the logistics and industrial portfolio and 91 per cent for the commercial portfolio. The weighted average lease expiry was 4.6 years for its top 10 portfolio tenants who are based in Australia, Germany and Singapore.

 

The manager said FLCT had a well-spread out lease expiry profile, with no more than 17.4 per cent of gross rental income (GRI) expiring in any single year, translating to reduced concentration risk. 54.7 per cent of its GRI contribution comes from logistics and industrial tenants.

 

Six industrial and 38 commercial leases are up for renewal for the rest of FY2022, translating to GRI of 4.8 per cent.

 

In January, FLCT announced the divestment of Cross Street Exchange in Singapore for S$810.8 million. This is expected to raise occupancy rate and lower its aggregate leverage, the manager said.

 

For Q1 2022, FLCT aggregate leverage stood at 34.3 per cent, average weighted debt maturity stood at 3.1 years while debt headroom was down S$139 million to S$2.32 billion. Total gross borrowings stood at S$2.56 billion.