Frasers Logistics & Industrial Trust (FLT) reported its 3QFY19 results which came in within our expectations. Revenue and NPI jumped 21.6% and 20.7% YoY to A$60.0m and A$49.6m (adjusted NPI +24.4% YoY), respectively. This was driven largely by acquisitions but partially offset by divestments.

DPU in AUD terms grew 3.4% YoY to 1.82 A cents. However, in SGD terms, DPU fell 3.9% to 1.73 S cents as a result of a lower hedged exchange rate of A$1.00: S$0.9504, versus A$1.00: S$1.0214 in 3QFY18.

On a 9MFY19 basis, FLT‟s adjusted NPI surged 37.3% to A$145.7m, while DPU in SGD terms declined 2.6% to 5.27 S cents due to similar reasons highlighted above (lower hedged exchange rate of A$1.00: S$0.9663, versus A$1.00: S$1.0466 in 9MFY18). The latter formed 74.4% of our FY19 forecast. In AUD terms, 9MFY19 DPU rose 5.6% to 5.45 A cents.

Operationally, FLT‟s portfolio remained resilient, with an occupancy rate of 99.5%. Two forward lease renewals were signed in 3QFY19, representing 1.4% of portfolio GLA and rental reversions were positive at 1.6%. FLT has completed its lease renewals for FY19, and there are only 5.5% of its leases expiring (based on gross rental income) in FY20.

On the financing front, FLT secured a new A$170m 5-year term green loan, and this has been swapped to EUR to take advantage of the negative Euribor interest rates. As a result, its average cost of debt will be lowered from 2.4% to 2.1%.

We currently have a HOLD rating fair value of S$1.20 on FLT.

Source: OCBC Research - 29 Jul 2019