Frasers Logistics & Commercial Trust (FLCT) 1QFY26 Business Update: Comprehensive Investor Report

Key Financial and Operational Highlights for 1QFY26

• Strong Portfolio Performance: For the quarter ended 31 December 2025, FLCT delivered robust operational results, underpinned by proactive portfolio management and resilient market demand for logistics and industrial (L&I) assets.
• Impressive Rental Growth: The average face rent reversions in the L&I segment soared by 36.4% (average vs. average), with a weighted average lease expiry (WALE) of 4.9 years across the portfolio. Total portfolio face rent reversion was a healthy 29.8% (average vs. average), with L&I at 36.4% and Commercial at -1.6%.
• Portfolio Occupancy Rate: Portfolio occupancy remained high at 96.2%, with L&I assets at 99.7% and commercial properties at 89.0%.
• Sustainability Credentials: FLCT retained its 5-Star GRESB rating for the ninth consecutive year and installed 19.7 MW of solar capacity across its portfolio, maintaining global sector leadership in ESG practices.
• Prudent Capital Management: Aggregate leverage stood at 34.8%, with S\$592 million of debt headroom to a 40% leverage ratio and S\$2,087 million to a 50% leverage ratio. 68.6% of borrowings are on fixed rates, mitigating interest rate volatility. The cost of borrowings is stable at 3.1%, and the interest coverage ratio is a solid 4.1x.
• Diversified and High-Quality Tenant Base: No single top-10 tenant contributes more than 5% to portfolio gross rental income (GRI), with an average WALE of 6.1 years among the top-10 tenants. Six out of the top 10 tenants have leases across multiple buildings, further reducing concentration risk.
• Portfolio Breakdown: FLCT manages 113 properties across Australia, Germany, the Netherlands, Singapore, and the UK. Portfolio value is S\$6.9 billion, with 75.1% in L&I, 20.2% in business parks, and 4.7% in office assets. Geographically, Australia represents 45.8%, Germany 26.0%, the Netherlands 5.5%, Singapore 12.5%, and the UK 10.2% of portfolio value.

Price-Sensitive and Shareholder-Relevant Developments

• Positive Rental Reversions: The standout 36.4% average face rent reversion in L&I assets is a clear indicator of FLCT’s pricing power in tight logistics markets, especially in Australia and Germany. These significant uplifts are likely to boost future income streams and may positively impact dividend distributions and NAV per unit.
• Portfolio Repositioning and Occupancy: Alexandra Technopark (ATP) in Singapore, previously impacted by the loss of Google as a tenant, has now secured leases for approximately 83% of the ex-Google space, up from 58% last quarter. While current occupancy (including committed leases yet to commence) is 86.3%, it would be 74.5% if excluding these leases. All committed leases are scheduled to commence by 3QFY26, providing visibility for future cash flows and reducing vacancy risk in a key asset.
• Well-Spread Lease Expiry Profile: 83.2% of portfolio leases have embedded CPI-linked or fixed escalations, ensuring predictable rental growth and providing a buffer against inflationary pressures.
• Interest Rate Sensitivity: Every 50 basis point increase in interest rates on variable rate borrowings is estimated to reduce distribution per unit (DPU) by 0.10 Singapore cents per annum. While 68.6% of borrowings are fixed, macroeconomic volatility remains a key risk to monitor.
• Capital Management and Liquidity: The trust has S\$251 million in undrawn committed facilities available to meet upcoming debt obligations, with only S\$60 million due in 2QFY26. Current aggregate leverage (34.8%) is well below regulatory limits, providing ample capacity for opportunistic acquisitions or portfolio enhancements.
• Sustainability as a Differentiator: >90% of the portfolio by GFA is green-certified or pursuing certification. The trust’s decarbonisation roadmap targets net-zero carbon across Scopes 1, 2, and 3 by 2050, with significant investments in solar capacity (19.7 MW), which may both attract capital from ESG-focused investors and reduce long-term operating costs.
• Macroeconomic Exposure and Market Outlook: The trust’s exposure to developed markets with strong GDP, e-commerce growth, and logistics demand (notably Australia and Germany) positions it to benefit from ongoing supply chain optimisation, near-shoring trends, and limited new supply due to power and infrastructure constraints.
• Potential Risks: A non-performing tenant in NSW, Australia, accounts for approximately 0.7% of annual GRI, with a Notice of Demand issued as of 31 December 2025. While this is not material to overall income, it is a risk item to monitor.
• Committed ESG Strategy: The trust’s ongoing climate risk assessments, green certifications, and solar initiatives are expected to drive long-term value, with possible future cost savings and enhanced tenant demand for sustainable facilities.

Market Environment and Outlook

• Australian Industrial Markets: Demand for prime grade space remains robust, with vacancy rates in Sydney at 2.9%, Melbourne at 4.7%, and Brisbane at 3.1%. Rental growth is expected to continue, especially in logistics hubs, supported by e-commerce expansion and supply constraints.
• European and UK Logistics: The German market remains resilient despite higher vacancies (3.5%), with 2.4% y-o-y prime rent growth and improving transaction activity. The Dutch market has seen a 131% y-o-y surge in take-up in Q3 2025, with prime rents holding steady and strong investor interest in core logistics assets. The UK’s West Midlands saw a 17% y-o-y increase in take-up, with strong rental and yield metrics.
• Singapore Market: Business park and logistics warehouse rents remained firm, with record net absorption of business park space in 2025 and robust demand from 3PLs and electronics sectors. Prime logistics warehouse occupancy reached 94.8% in Q4 2025.

Investor Takeaways

FLCT’s 1QFY26 performance underscores the resilience and growth potential of its diversified logistics and commercial portfolio. With strong rental reversions, high occupancy, prudent debt management, and industry-leading sustainability credentials, FLCT is well-positioned to deliver sustainable income and capital growth for unitholders.

The trust’s proactive asset and capital management, combined with exposure to structurally growing sectors and geographies, suggests positive prospects ahead. However, investors should remain vigilant to macroeconomic risks, especially interest rate movements and isolated tenant defaults.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All forward-looking statements are subject to risks and uncertainties. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions.

View Frasers L&C Tr Historical chart here