Frasers Logistics & Industrial Trust (FLT) reported its 1QFY17 results which met our expectations. Gross revenue came in at A$39.7m, which was slightly lower than its IPO Prospectus forecast (proportionally pro-rated for the quarter) by 1.5%.

The variance can be attributed largely to the delay in acquiring the Martin Brower call option property. This was completed on 30 Nov 2016, versus the projected acquisition date of 1 Oct 2016. However, its DPU of 1.74 S cents exceeded its IPO Prospectus forecast by 6.1% and was driven mainly by lower-than-expected finance costs. FLT’s gross revenue and DPU formed 24.3% and 25.9% of our FY17 projections, respectively.

Looking ahead, we expect FLT’s portfolio to remain resilient, as it only has 0.6% and 3.5% of lease expiries (by gross rental income) during the years ending 31 Dec 2017 and 31 Dec 2018, respectively. FLT’s portfolio occupancy stood at a healthy 99.3%, as at 31 Dec 2016, and it also has a long portfolio WALE of 6.9 years.

In terms of financial position, FLT has a low gearing ratio 29.7%, as at end- 1QFY17. We will provide more details after the analyst conference call. Maintain BUY on FLT, but we will be reviewing our S$1.10 fair value.

Source: OCBC Research - 6 Feb 2017