Frasers Logistics & Commercial Trust growth supported by $5.9b acquisition pipeline

The company has the right of first refusal for 64 properties in APAC and Europe.

Frasers Logistics & Commercial Trust (FLCT) has a sizable support pipeline for growth, owning the right of first refusal to acquire 64 properties with net lettable area of 1.9 million square metres in the Asia Pacific region and Europe, according to a report by UOB Kay Hian.

The report also said that the acquisition pipeline provided by sponsor Frasers Property Ltd. (FPL) is valued at $5.9b as of 20 September.

Recently, FLCT has just completed the acquisition of four freehold logistics properties in Europe from FPL. 

“Together with the acquisition of two freehold properties in the UK from a third-party vendor, the acquisitions are accretive to pro forma 1HFY21 DPU by 1.8%,” UOB said.

Meanwhile, 2020 online retail sales penetration in Australia jumped 3.3 percentage points to 12.6% which is structural in our view and did not reverse post-lockdown. Yields were compressed by 46bp, 57bp and 50bp year-on-year (YoY), respectively to 4.25% in Sydney, 4.43% in Melbourne, and 5% in Brisbane due to an abundance of liquidity competing to acquire tenanted logistics properties at prime locations.

FLCT is also benefiting from two growth engines in Germany. 

Take-up for logistics space increased 13% YoY to 1.6m sqm in the first quarter (Q1) of 2021, whilst vacancy rate was ultra-low at 1.3% for prime locations due to a persistent shortage of logistics space. The average rents for logistics space increased 2% YoY to €6.43 per sqm per month in Q1 2021. The yield fell further by 0.2 percentage points YoY to 3.4%.