Frasers Logistics & Industrial Trust

Frasers Logistics & Industrial Trust (FLIT), one of the largest pure-play Australian industrial REIT, is seeking a listing on the Mainboard of SGX.

The IPO offer of 521.7m new units is priced at the top end of the offering price range of $0.89 each, with 84.7% assigned to a placement tranche for institutional investors, and remaining 15.3% for the general public. Another 492.8m units is reserved for 15 cornerstone investors, including Morgan Stanley (4.3%), Lion Global Investors (3.9%) and Affin Hwang Asset Management (3.9%). Post IPO, sponsor Frasers Centrepoint will own 20-22.5% of FLIT.

This will give rise to a gross proceeds of $876.7m, and will be support the REIT in acquisition of properties, working capital and transaction fees.

FLIT will have a total portfolio value of $1.6b, comprising of 51 logistic and industrial properties, with a gross lettable area of 1.16m sqm, mainly spread across three cities of Melbourne (40%), Sydney (28%) and Brisbane (28%).

60% of the portfolio is freehold, while the remaining assets have long leases of 80 years. Portfolio occupancy stood at 98.3%, with weighted average lease to expiry of 6.9 years, which is way higher than most Singapore industrial landlords.

Aggregate leverage is at 25%, but may be elevated to 31% next year if the REIT successfully exercises its call option to acquire three more properties.

Gross revenue and NPI and grew at CAGR of 5% and 4.1% respectively over the last three years, mainly boosted by property acquisitions.

Going forward, the REIT will continue to source and pursue inorganic growth with an initial focus in Australia, but is not limited to opportunities within the country. It will also consider to undertake selective property development projects.

FLIT expects to offer an annualised distribution yield of 6.83% for FY9/16, and 7.02% in FY17. This may be boosted to 7.3% if the REIT exercises its call option on Oct 1.

Based on the IPO price, FLIT has a P/B of 1.04x, which is higher than the average of its Singapore-listed peers of 0.87x. However, it is priced lower than other Australian peers such as BWP Trust (1.46x) and Industria REIT (1.05x) and yield is of 6.8-7% is attractive given that the bulk of its assets are freehold and locked on long term leases.

The public offer has commenced at 9pm, 10 Jun, and will close on 12pm, 16 Jun. First day of trading is expected to be on 21 Jun.