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)

Units Frasers Logistics & Industrial Trust finished its first trading on the Singapore Exchange 2.2% higher from its initial public offering (IPO) price of SGD0.89.

The industrial REIT opened at SGD0.905 and went as high as SGD0.93 as it approaches mid-day, in line with broader gains made by the benchmark Straits Times Index (STI) on easing fears of Britain leaving the European Union in a referendum this 23 June. The counter retreated to its closing price from around 4 p.m. local time.

Frasers Logistics & Industrial Trust announced on 17 June that its IPO of 521,749,000 units was six times subscribed overall, with the bulk of interest coming from institutional investors. The offering raised some SGD903 million, making it Singapore's largest IPO since 2013.

The REIT, which is sponsored by Singapore-listed Frasers Centrepoint Limited, has an initial portfolio of 51 Australian industrial properties and has been given call option rights to acquire three more post-listing. Of the existing properties, 25 are located in Melbourne, 12 in Sydney, 9 in Brisbane, 4 in Adelaide and the remaining one in Perth.

Aggregate portfolio occupancy is currently at 98.3% with a weighted average lease expiry (WALE) of 6.9 years. Portfolio size at the time of IPO was at AUD1.58 billion (USD1.18 billion) with a net lettable area of 1.2 million square metres. Portfolio occupancy is currently at 98.3%.

Frasers Logistics & Industrial Trust'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 IPO 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%.

The REIT 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.