Why Frasers Logistics & Industrial Trust is expanding its Oz portfolio

Properties may spur growth for the company.

Frasers Logistics and Industrial Trust (FLT) is banking on a positive demand-supply dynamics within Australia’s industrial real estate market to boost earnings.

OCBC revealed that Jone Lang LaSalle (JLL) believes the supply of industrial assets in Australia will come in below the 10-year annual average of 1.7 million sqm in 2016. This pipeline is largely contributed by projects in the planning stages. On the other hand, demand, as measured by occupier take-up, was 2.3 million sqm in 2015. This exceeded the 10-year average of 2.0 million sqm.

Considering this, FLT has ample avenues to spur future growth especially with its two new call option properties. Including the company’s initial IPO portfolio of 51 prime industrial and logistics assets that are strategically located across five states in Australia, FLT’s portfolio now comprises 53 properties.

“Its initial IPO portfolio is made up of 60.0% freehold assets, 30.2% assets with long leasehold land tenure of at least 80 years and the remaining 9.8% assets with leasehold land tenure between 17-37 years. In addition, it has a high portfolio occupancy rate of 98.3% with a diverse and high quality tenant base spread across a broad range of sectors. Its portfolio WALE is also relatively long at 6.9 years,” OCBC explained.