Frasers Logistics & Industrial Trust Q1 NPI jumped 46.5% to $48.93m

The firm's Australian and European buys drove the income boost.

Frasers Logistics & Industrial Trust (FLT) opened the year on strong financial footing with its Q1 net property income (NPI) climbing 46.5% YoY to $48.93m from $33.39m in Q1 2018, an announcement revealed. Revenue also jumped 40.3% to $59.52m from $42.43m

The firm’s distributable income also rose 41.9% YoY from $25.85m to $36.7m in Q1. On the other hand, its distribution per unit (DPU) dipped 1.1% YoY to $0.017 from $0.018 in 2018.

FLT attributed the increases to its NPI and revenue to contributions from the firm’s FY18 acquisitions in Europe and Australia, as well as the surrender fee of $1.17m (AUD1.2m) the firm received for a property at Dandenong South in Victoria, Australia. This was however partially offset by the divestment of two Australian properties in August 2018.

Also read: Frasers Logistics & Industrial Trust NPI ballooned 52.6% to $49.31m in Q4

“The prime logistics sector across our key markets remains well-supported by investments in infrastructure and a burgeoning e-commerce market,” Frasers Logistics & Industrial Asset Management’s CEO Robert Wallace said in a statement.

As of 31 December 2018, FLT’s portfolio remained at near full occupancy at 99.6% with a weighted average lease expiry (WALE) by gross rental income (GR) of 6.71 years, the firm added.

According to FLT, industrial take-up levels in Australia continued to be above historical benchmarks with a total of 2.5 million sqm leased over 2018, which is primarily attributable to the benefits of an e-commerce boom, increased public infrastructure spending and and tenant consolidations.

“The Sydney and Melbourne industrial markets are still outperforming, with demand outstripping supply and falling vacancies,” FLT noted in its financial statement. “Prime rents in Sydney have experienced strong annual growth of 4.3% whilst Melbourne has recorded a steady rental growth across almost all precincts.”

Also read: Frasers Logistics and Industrial Trust's European debut to boost DPU: analysts

As for its properties in Europe, the market share generated by light industrial assets in Germany increased in the past months with industrial assets accounting for one third of transaction at an estimated $2.32b (EUR1.5b). Again, e-commerce drove up demand for industrial and logistics properties in Germany.

In the Netherlands, the supply of industrial and logistics real estate decline albeit demand remaining high. The firm further revealed that in the south of Netherlands, more large distribution centres are being developed on the back of lower land prices and the location of the east-west transport corridor from the Rotterdam harbour to the rest of the European markets.

Amidst escalating global trade tensions which have weighed down the Australian dollar and developments on Brexit, FLT highlighted it will maintain its focus on expanding its prime logistics sector.

“General conditions for the logistics and industrial market in Germany and the Netherland remain consistently favourable for investors,” the firm stated. “Looking ahead, Frasers Logistics & Industrial Asset Management will continue to grow FLT’s prime industrial portfolio with a focus on generating sustainable long-term value for unitholders.”