Frasers Logistics & Commercial Trust (SGX: BUOU) Delivered Strong 2H Results
Updated: Nov 23, 2020
Frasers Logistics & Commercial Trust (SGX: BUOU) has recently announced its second-half 2020 financial results. It is trading at 5.7% dividend yield based on its last traded of $1.25 on 13 Nov.
Key Highlights:
Distribution per unit (DPU) and Dividend Yield (5.7%)
Price to book ratio (1.14)
Gearing (37.4%)
Portfolio Occupancy (97.5%)
Interest coverage ratio (6.4x)
Growth catalyst
Background of Frasers Logistics & Commercial Trust
Frasers Logistics & Commercial Trust is a combined REIT of Frasers Logistics & Industrial Trust and Frasers Commercial Trust. The REIT owns and manages 93 industrial properties and 7 commercial properties, with a total portfolio value of $6.2b.
Frasers Logistics & Commercial Trust’s sponsor, Frasers Property Ltd (SGX: TQ5), has an approximately 20% stake in the REIT.
1. Distribution per unit and dividend yield
Its net property income in 2H2020 spiked 80.6% to $161.4m. This was mainly boosted by the merger and new acquisitions in Europe and Australia.
Based on its latest price, the REIT is currently trading at about 5.7% dividend yield. Historically, the REIT's DPU has been very stable in the past 5 years. The average yield was 6.8%.
2. Price to book ratio
Over the past 5 years, Frasers Logistics & Commercial Trust has been trading at an average price to book ratio of 1.15. Its current price to book ratio of 1.14 is at fair value compared to its historical average.
3. Gearing
Portfolio leverage remains conservative at 37.4%, with a weighted debt maturity of 3 years.
4. Portfolio Occupancy
The portfolio occupancy remains healthy at 97.5%, its industrial portfolio maintains 100% occupied and commercial portfolio is at 94.3%. The REIT has a weighted average lease expiry of 4.9 years and less than 7.9% of its leases are up for renewal next year.
5. Interest coverage ratio
Frasers Logistics & Commercial Trust has a low interest coverage ratio of 6.4 times, which is above our preference of 4 times. The REIT maintains a low interest cost of 1.9%, 54.6% of its debt are under fixed rate.
6. Growth Catalyst
Moving forward, the REIT management guided that Covid-19 remains as a major uncertainty that disrupts the business environment in Australia and Europe, while Singapore is gradually easing restrictions with the reopening of the economy.
Summary
The REIT has been delivering strong fundamental metrics over the years. With the combined REIT, it grows to become one of the largest REIT listed in Singapore with a well diversified portfolio.