Frasers Logistics & Industrial Trust’s (FLT) 3QFY18 results came in within our expectations. Gross revenue and NPI jumped 22.6% and 21.7% YoY to A$49.3m and A$41.1m, respectively. Adjusted NPI (excluding straight-lining adjustments) improved 27.4% YoY to A$39.3m.

This was driven largely by contribution from acquisitions in Australia which achieved practical completion after 3QFY17, annual fixed increment in its Australia portfolio and an incremental NPI of A$5m (~EUR3.2m) from its Europe portfolio acquisition in May this year.

DPU in SGD terms grew at a smaller magnitude of 2.9% YoY to 1.80 S cents due to a better currency hedge rate of A$1: S$1.0214 which FLT entered into (3QFY17: A$1: S$1.002) but partially offset by an enlarged unit base from its equity fund raising exercise.

For 9MFY18, FLT’s adjusted NPI increased by 14.8% to A$106.1m, while DPU of 5.41 S cents represented an improvement of 3.2% and formed 75.4% of our FY18 forecast. Overall portfolio metrics remained healthy, with occupancy of 99.3% and long WALE of 7.0 years.

Rental reversions in 3QFY18 were flat, versus declines seen in the previous few quarters. We will provide more details after the analyst conference call. We currently have a BUY rating and S$1.21 fair value on FLT.

Source: OCBC Research - 2 Aug 2018