FLCT 1HFY21 DPU up 9.5% to 3.80 Singapore cents1
1HFY21 Highlights
- Completed 62,587 sq m of leasing for the period from January to March 2021, bringing total leasing activity in 1HFY21 to 126,133 sq m or 5.0% of total portfolio lettable area
- Maintained high portfolio occupancy rate of 96.8% with a WALE of 4.7 years as at 31 March 2021
- Healthy aggregate leverage of 35.3% and NAV per unit of S$1.14 as at 31 March 2021
- FLCT included as a constituent of the benchmark Straits Times Index (STI) on 13 April 2021; and was also assigned a first-time ‘BBB+’ credit rating with a ‘Stable’ outlook by S&P Global on 15 April 2021
Summary of Results2
S$’000 |
1HFY21 |
1HFY20 |
Variance (%) |
Revenue |
231,701 |
118,745 |
95.1 |
Adjusted Net Property Income3 |
173,890 |
96,980 |
79.3 |
Distributable Income |
130,426 |
76,217 |
71.1 |
DPU (Singapore cents) |
3.80 |
3.47 |
9.5 |
S$ |
As at 31 Mar 21 |
As at 30 Sep 20 |
Variance (%) |
NAV per unit |
1.14 |
1.10 |
3.6 |
SINGAPORE, 6 MAY 2021
Frasers Logistics & Commercial Asset Management Pte. Ltd., the manager of Frasers Logistics & Commercial Trust (“FLCT” and the manager of FLCT, the “REIT Manager”), today announced FLCT’s results for the six-month period ended 31 March 2021 (“1HFY21”).
1HFY2021 FINANCIAL PERFORMANCE AND DISTRIBUTION
FLCT achieved a record revenue of S$231.7 million and Adjusted Net Property Income of S$173.9 million for 1HFY21, representing increases of 95.1% and 79.3% respectively, from S$118.7 million and S$97.0 million in the corresponding financial period (“1HFY20”). The increases were mainly contributed from the merger with Frasers Commercial Trust (the “Merger”) which was completed in April 2020, acquisitions made in the financial year ended 30 September 2020, as well as the strengthening of the AUD:SGD and EUR:SGD. These were partly offset by the divestments made in 1HFY21 and rental waivers and allowance for doubtful receivables of S$1.2 million attributable to the Covid-19 pandemic. Accordingly, distributable income rose 71.1% to S$130.4 million for 1HFY21, from S$76.2 million a year ago.
The distribution per unit (“DPU”) for 1HFY21 was 3.80 Singapore cents, up 9.5% from 3.47 Singapore cents in 1HFY20, which will be paid on 18 June 2021.
PORTFOLIO UPDATE
In 1HFY21, FLCT executed 33 leasing transactions, representing a lettable area of 126,133 square metres (“sq m”)4. The healthy leasing momentum enabled FLCT to maintain a strong occupancy rate of 96.8%5 and a weighted average lease expiry (“WALE”) of 4.7 years5, with minimal upcoming lease expiries of just 3.5%5 of gross rental income in the financial year ending 31 September 2021 (“FY2021”).
The divestment of FLCT’s three leasehold properties in South Australia was also completed on 24 March 2021. Post-divestment, the FLCT portfolio comprises 90 logistics and industrial properties and 7 commercial properties, with a total value of approximately S$6.3 billion as at 31 March 2021. Its net asset value (“NAV”) per unit was S$1.14 as at 31 March 2021.
Mr. Robert Wallace, Chief Executive Officer of the REIT Manager, said, “I am delighted that FLCT is in a position to report a record 1HFY21 DPU of 3.80 Singapore cents, and a healthy portfolio occupancy rate of 96.8%. FLCT’s performance in the year-to-date demonstrates the strength and resiliency of our prime logistics and commercial portfolio, further reinforced by our proactive asset, capital and investment management approach.”
“We also achieved two milestones in April 2021, firstly with FLCT being included as a constituent stock of the benchmark Straits Times Index and secondly, the assignment to FLCT of an inaugural ‘BBB+’ credit rating with a ‘Stable’ outlook by global rating agency S&P Global. Both achievements are expected to elevate FLCT's profile and will assist it to generate sustainable long-term growth for unitholders.”
CAPITAL MANAGEMENT
As at 31 March 2021, FLCT’s aggregate leverage was 35.3%. Total borrowings were S$2,319 million, 70.6% of which were at fixed interest rates. The weighted average interest rate for borrowings excluding upfront debt related expenses for 1HFY21 was 1.9%6 per annum.
OUTLOOK
The overall operating environment is expected to remain uncertain as the COVID-19 pandemic continues to disrupt global economic activity. While the progressive rollout of vaccines against the coronavirus offers a path out of the pandemic, there remains significant uncertainty as to when a return to normalcy would be fully realised, as concerns of the emergence of new virus variants, as well as resurgence of COVID-19 infections, remain.
In Australia, the number of COVID-19 cases has significantly declined, with little to no community transmissions, as a result of stringent mitigation strategies. Nevertheless, COVID-19 remains a major public health issue that may bring about significant effects on the domestic economy and financial system. There are also concerns relating to the deterioration of relationships between the Australian and Chinese governments and any implications that may arise as a result of any trade restrictions implemented by China. Following a record 7.0% decline in GDP for the quarter to June 2020 following public health measures that were implemented in late March, Australia’s GDP rebounded to report growth of 3.4% and 3.1% for the September and December quarters respectively, as stringent public health measures were relaxed. According to the latest statement from the Reserve Bank of Australia in February 2021, the country’s GDP is expected to reach pre- pandemic levels over the course of 2021, around 6–12 months earlier than previously expected, and the International Monetary Fund (IMF) has also said in April 2021 that it expects the Australian economy to grow by 4.5% in 2021.
In Singapore, a recent increase in the number of locally-transmitted COVID-19 cases has prompted the authorities to implement additional community measures, including the tightening of workplace measures for the period from 8 May through 30 May 2021, such as requiring employees to ensure that no more than 50% of employees who are able to work from home return to the workplace at any time. The REIT Manager is closely monitoring this developing situation and is basing its actions and decisions on recommendations from local authorities. According to the Monetary Authority of Singapore’s statement on 28 April 2021, the Singapore economy, which grew 2.0% quarter-on-quarter in the first quarter of 2021, is expected to exceed the upper end of an earlier official 4 – 6% GDP growth forecast for 2021.
In Germany and the Netherlands, following a surge in infection cases, the authorities have maintained tight COVID-19 restrictions to contain the virus spread. For the United Kingdom, supported by the rollout of its nationwide vaccine program and a declining rate of COVID-19 transmission, the government ended the ‘Stay at Home’ national lockdown on 29 March 2021. Progressive easing of their lockdown by phases started from 12 April 2021, including the re-opening of non-essential retail and a return to the workplace.
According to the IMF, the 2021 projected real GDP for German, British and Dutch economies are forecast to increase by 3.6%, 5.3% and 3.5% respectively.
As we continue to navigate through this period of global uncertainty, FLCT remains focused on managing any financial implications arising from COVID-19 and will continue to work closely with our tenant community to overcome this trying period.
Although the situation remains dynamic, there has been no material impact to the FLCT portfolio to-date with only the retail segment of the commercial portfolio, which represents just 1.8%7 of FLCT’s total portfolio income, being more challenged. Capital and liquidity management remains a key strategic priority. FLCT’s resilient portfolio, strong balance sheet and financial flexibility, well positions the REIT to face the current challenging global environment.
Looking ahead, the REIT Manager will continue to focus on proactive asset and lease management strategies to generate sustainable long-term value for FLCT unitholders.