DBS, OCBC reiterate ‘Buy’ ratings on Frasers industrial REIT after 3Q 2017 results

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DBS Equity Research and OCBC Investment Research have both reiterated their respective ‘Buy’ ratings on Frasers Logistics & Industrial Trust after the REIT reported on 28 July that it has achieved a distribution per unit (DPU) of 1.75 Singapore cents for its 3Q 2017.

As such, the DPU has beaten forecast made during the REIT’s initial public offering (IPO) by 6.7%.

This was despite the REIT missing its revenue forecast for the period by 0.2%, which came it at AUD40.2 million (USD32 million).

[Frasers Logistics & Industrial Trust’s] portfolio occupancy remained high at 99.3%, with a long WALE [weighted average lease expiry] of 6.7 years, as at 30 Jun 2017”, said OCBC in an investment report issued on 31 July.

DBS echoed this sentiment, and highlighted that the REIT only has 2.5% of its income up for renewal up to FY18, which implies that its income is fairly secure.

However DBS noted that while 26,920 square metres of leases were renewed at two properties, both leases were renewed lower due to the tough operating environment in Adelaide, among other factors.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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