[SINGAPORE] Frasers Logistics and Commercial Trust (FLCT) on Wednesday (May 7) posted a 13.8 per cent fall in distribution per unit (DPU) to S$0.03 for its first half ended March 31, from S$0.0348 in the corresponding period in the previous year.
This decline reflects transitional challenges in the commercial portfolio and foreign exchange volatility in a higher interest-rate environment, according to the manager of the real estate investment trust (Reit).
The distribution will be paid out on Jun 18, and represents an annualised distribution yield of 6.5 per cent, based on the annualised DPU and market closing price of S$0.92 as at Mar 28 (the last trading day of that month).
Revenue improved by 7.5 per cent to S$232.3 million for the period, from S$216 million in H1 FY2024, and net property income (NPI) rose by 5.4 per cent to S$167.4 million from S$158.8 million in the same period a year prior.
These increases were mainly due to contributions from the acquisition of a six-storey ramp-up logistics facility in Tuas for S$140.3 million in November 2024 and the Maastricht property in the Netherlands, which achieved practical completion in October 2024.
Full contributions from the acquisition of an 89.9 per cent interest in four German logistics properties in March 2024 and Ellesmere Port upon practical completion in December 2023 also contributed to the rise in revenue and NPI for the period.
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These were partially offset by higher non-recoverable land taxes for Victoria and Queensland, Australia, from January 2024 and July 2024, respectively; higher vacancies in Alexandra Technopark and 357 Collins Street; and the effects of lower average exchange rates of the Australian dollar and euro against the Singapore dollar in H1 FY2025 relative to the same period a year prior.
The manager said that after excluding straight lining adjustments for rental income and adding lease payments of right-of-use assets, the adjusted NPI increased by 1.6 per cent to S$161.3 million for the period from S$158.7 million.
Distributable income decreased by 13.5 per cent to S$113 million for H1 FY2025 from S$130.7 million in the corresponding year-ago period, after taking into account the higher finance costs, higher tax expense and 56.9 per cent of H1 FY2025 management fees paid in the form of cash.
The finance costs were higher mainly due to the increase in interest rates and additional borrowings drawn for fund through developments and acquisitions, the manager of the Reit explained.
The occupancy rate was at 93.9 per cent, and the overall weighted average lease expiry was 4.6 years.
Gearing remained steady at 36.1 per cent as at Mar 31, with a weighted average debt maturity of 2.3 years and interest coverage ratio of 4.5 times.
Debt headroom stood at S$447 million (on the basis of an aggregate leverage of 40 per cent).
Looking ahead, the manager said that FLCT will continue to actively optimise occupancies of its commercial assets through proactive asset management and competitive marketing initiatives.
Anthea Lee, chief executive officer of the Reit manager, said: “It remains our priority to pursue strategic growth opportunities in the resilient logistics and industrial segment, while simultaneously evaluating the potential divestment of non-core office assets to optimise our portfolio composition.”
She added that deliberate steps are being taken to preserve debt headroom for long-term growth and value creation, while being mindful of the concerns associated with significant DPU fluctuations.
Units in FLCT ended Tuesday at 0.6 per cent or S$0.005 higher at S$0.905.
