99 Station Road in Sydney, a property in the initial portfolio of Frasers Logistics & Industrial Trust. (Photo: Frasers Logistics & Industrial Trust)99 Station Road in Sydney, a property in the initial portfolio of Frasers Logistics & Industrial Trust. (Photo: Frasers Logistics & Industrial Trust)

Frasers Centrepoint Limited announced on 3 June that it has lodged a preliminary prospectus with the Monetary Authority of Singapore for an industrial REIT to be listed on the mainboard of Singapore Exchange. The REIT will be known as the Frasers Logistics & Industrial Trust.

Name Frasers Logistics & Industrial Trust
Type Industrial REIT
Bourse Singapore Exchange
IPO Date 21 June 2016
IPO Price SGD0.89
Asset Size AUD 1.58 billion
Net Lettable Area 1.2 million square metres
Occupancy 98.3%
Gearing 29%

Here is a summary of what you need to know about the REIT.

Portfolio

The REIT will comprise of an initial portfolio of 51 industrial and logistics properties across Australia. Of these, 25 are located in Melbourne, 12 in Sydney, 9 in Brisbane, 4 in Adelaide and the remaining 1 in Perth.

Two of these properties are currently under development but are fully committed to tenants CEVA Logistics and Schenker respectively. The REIT will also have the option to acquire three more properties from Frasers Australia post-IPO.

Aggregate portfolio occupancy is currently at 98.3% with a weighted average lease expiry (WALE) of 6.9 years.

The portfolio, which will feature a gross lettable area of approximately 1.2 million square metres, has been appraised at approximately AUD1,584.6 million (SGD1,600.4 million). The aggregate purchase consideration payable by Frasers Logistics & Industrial Trust for the IPO Portfolio is AUD1,578.2 million (SGD1,594 million).

IPO

Frasers Logistics & Industrial Trust has indicated a minimum offer price of SGD0.85 and a maximum offer price of SGD0.89 for its initial public offering (IPO). The final price has since been set at SGD0.89 citing strong demand.

80 million units will be offered to in the public trance while 492.8 million units will be offered to cornerstone investors. Minimum initial subscription is for 1,000 units.

The IPO is currently scheduled to open for subscription on 10 June at 9 p.m. and close on 16 June at 12 p.m. Units of Frasers Logistics & Industrial Trust is scheduled to commence trading on the Singapore Exchange on 21 June 2016.

DPU

The REIT’s distribution per unit (DPU) for the period of 1 June 2016 to 30 September 2016 is forecast at 2.03 Singapore cents, translating to a yield of 6.83% for the period based on the offering price.

Meanwhile DPU forecast for 1 October 2016 to 30 September 2017 is at 7.02 cents, which signifies a yield of 7.02% for the 2017 time period. However should the REIT exercise it options to acquire three more properties from the sponsor, the yield for 2017 may be as high as 7.3%.

Frasers Logistics & Industrial Trust has committed to pay out 100% of its distributable income for 2016 and 2017. Thereafter the REIT will distribute 90% of its income on a semi-annual basis.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.