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

The initial public offering (IPO) for Singapore's latest industrial REIT, Frasers Logistics & Industrial Trust has been priced at SGD0.89, representing the top end of a range first indicated in its initial prospectus from early June 2016.

The IPO consists of a placement tranche of 441,749,000 units and a public tranche of 80 million units. Total proceeds of approximately SGD464.4 million is expected to be raised in the offering in addition to the SGD804 million that will be raised from sponsor and cornerstone subscribers.

The REIT will feature an initial portfolio of 51 industrial 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. Aggregate portfolio occupancy is currently at 98.3% with a weighted average lease expiry (WALE) of 6.9 years.

“While Frasers Logistics & Industrial Trust has an initial focus on Australia, the REIT manager will continuously evaluate opportunities outside Australia and take a considered approach in deciding whether Frasers Logistics & Industrial Trust should explore these opportunities”, said the REIT in its prospectus.

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%.

Opening date and time to subscribe to the IPO is at 9 p.m. on Friday 10 June while the closing date has been set at 12 p.m. on Thursday 16 June. Units of Frasers Logistics & Industrial Trust will commence trading on the Singapore Exchange at 9 a.m. on Tuesday 21 June.

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.