Date of Report: October 18, 2024
Broker: CGS International Securities

Overview

Frasers Logistics & Commercial Trust (FLCT) is a real estate investment trust (REIT) focused on owning and managing a diversified portfolio of logistics and commercial properties. It has recently taken a strategic step by entering the Singapore logistics property market.

Strategic Acquisition

FLCT has announced its maiden purchase of a logistics property in Singapore, marking its first foray into this sector within the region. This acquisition is seen as a strategic move to expand its portfolio and presence in a key market.

Funding and Financial Impact

• Funding Method:
  The acquisition will be debt-funded, indicating that FLCT is leveraging its financial capabilities to expand without diluting existing shareholders’ equity.
• Distribution Per Unit (DPU):
  The purchase is projected to be DPU accretive, which means that it is expected to enhance returns for shareholders by increasing the income distributed per unit.

Rating and Price Target

• Broker Recommendation:
  CGS International Securities has reiterated an “Add” rating for FLCT, signifying a positive outlook on the REIT’s potential to generate more than a 10% return over the next 12 months.
• Target Price:
  The target price remains unchanged at S$1.35, reflecting confidence in the REIT’s growth prospects following this strategic acquisition.

Analyst Remarks

The report underscores that FLCT’s expansion into the Singapore logistics market aligns with its strategy to diversify and grow its asset base in high-demand sectors. The acquisition is expected to contribute positively to its financial performance, supporting the broker’s optimistic outlook.