CGS International
August 1, 2025

Frasers Logistics & Commercial Trust: Resilient Performance with Growth Opportunities Despite Short-Term Vacancy Drag

Overview: Strong Rental Reversions Offset by Temporary Occupancy Dip

Frasers Logistics & Commercial Trust (FLCT) delivered a robust 3QFY9/25 business update, demonstrating strong rental reversions and resilient financials, despite facing a slight drag in occupancy from its logistics and industrial (L&I) segment. The trust continues to stand out among Singapore REITs (S-REITs) for its proactive asset management, healthy gearing, and ongoing commitment to ESG best practices.

Portfolio Performance: Mixed Occupancy Trends and Positive Rental Reversions

• Portfolio occupancy dipped marginally to 92.5% at end-3QFY9/25 (from 93.9% at end-1HFY9/24).
• Industrial portfolio occupancy dropped to 96.7% due to a Singapore tenant exercising a lease break option.
• Commercial portfolio occupancy improved to 85.1%, with better take-up at Farnborough Business Park, Maxis Business Park, and Blythe Valley Park.
• Overall rental reversions were strong at +16.4% (outgoing vs incoming basis), and +43.3% on an average basis, for approximately 101,000 sqm of leases signed during the quarter.
• On a 9-month-to-date basis, rental reversions averaged +6.8% (outgoing vs incoming) and +30.7% (average vs average).

Logistics & Industrial Segment: Vacancy Drag Offset by Re-leasing Success

• The dip in L&I occupancy stemmed mainly from a tenant’s lease break in Singapore.
• One-third of the vacated space was backfilled immediately; the remainder was committed post-quarter.
• FLCT achieved a +20.3% rental reversion on approximately 92,000 sqm of new or renewed leases in the L&I segment.

Commercial Segment: Progress in Backfilling Major Vacancies

• At Alexandra Technopark, 54% of the space previously leased to Google has been backfilled, raising committed occupancy to 74.3%.
• Australian commercial leases saw positive rental reversions between +8.6% and +17%.

Capital Management: Healthy Gearing and Strategic Divestment

• Gearing increased to 36.8% by end-3QFY25; average borrowing cost rose to 3.2%.
• FLCT announced the divestment of 357 Collins St in July 2025 for A\$192.1m (post-lease incentives), with completion expected by September 2025.
• The sale is projected to improve portfolio metrics and reduce gearing by 1.5 percentage points, enhancing debt headroom for future acquisitions and divestments.

Financial Highlights and Forecasts

Peer Comparison: S-REIT Dividend Yields and Market Positioning

FLCT’s projected FY26F dividend yield of 6.5% remains competitive against sector peers, with an attractive total return profile and a robust balance sheet supporting inorganic growth. Below are select S-REIT yields by segment:

ESG Commitment: Steady Progress and Recognitions

FLCT scored B- for its ESG Combined Score in FY24, with notable strengths:

• Environmental: C+ | Social: B- | Governance: A- | ESG Controversies: A+
• Maintained 5-Star GRESB rating for the eighth consecutive year and MSCI ESG ‘A’ rating in FY24.
• Net zero emissions targeted by FY2050 across Scopes 1, 2, and 3.
• 85% of owned and asset-managed properties to be green-certified by FY30; 89% already certified as of end-FY24.
• Installed 915 sqm of solar panels at Alexandra Technopark (203 kW), with over 12MW installed across European, UK, and Australian properties.
• Generated over 10 GWh of onsite solar energy (+19% YoY in FY24); renewables account for 12.8% of electricity usage.
• Scopes 1 and 2 emissions down 4% YoY and 39% from FY19 baseline.
• Recycling rate: 29.4% in FY24; 74% of borrowings are green or sustainable financing.
• Net Promoter Score from tenant survey rose to 76 points (from 53); average 21 learning hours per employee.

FLCT’s ESG achievements have not yet been factored into its fundamental valuation, but ongoing progress may support future operational and financial improvements.

Strategic Outlook: Growth Catalysts and Risks

• Stable distributable per unit (DPU) outlook with FY25-27F DPU estimates unchanged and DDM-based target price held at S\$1.11.
• Projected FY26F dividend yield of 6.5% suggests much of the slower DPU growth is already priced in.
• Key upside catalyst: Accretive acquisitions supported by low gearing and strong balance sheet.
• Risks: Inability to secure accretive deals or a weak macroeconomic environment could pressure occupancy and rents.

Major Shareholders and Market Data

• FPL: 22.5%
• Rojana Industrial Park: 4.2%
• TCC Group: 3.5%
• Free float: 69.8%
• Market cap: S\$3,318 million (US\$2,557 million)
• Shares outstanding: 3,771 million
• Current price: S\$0.88 | Target price: S\$1.11 | Upside: 26%

Conclusion: Robust Fundamentals and Growth Prospects

Frasers Logistics & Commercial Trust continues to demonstrate defensive earnings, strong rental reversions, and disciplined capital management, positioning itself for sustainable growth. With a healthy dividend yield, active ESG initiatives, and a pipeline for accretive acquisitions, FLCT remains a top pick for investors seeking resilient S-REIT exposure with a progressive sustainability profile.