Frasers Logistics & Industrial Trust to buy seven Australian properties for A$169.3m

FRASERS Logistics & Industrial Trust (FLT) will make its first portfolio acquisition of seven fully leased or precommitted industrial properties in Australia for about A$169.3 million (S$175 million).

FLT's manager, Frasers Logistics & Industrial Asset Management, said in a filing to the Singapore Exchange (SGX) on Tuesday that the new properties have an average age of 2.4 years as at end-March 2017 and are located in Sydney, Melbourne and Brisbane, Australia's three largest industrial and logistics markets.

The proposed acquisition from Frasers Property Australia comprises four completed properties and three that are currently under development. This portfolio has a weighted average lease expiry of 9.6 years.

Rental income from the new properties is underpinned by reputable tenants of which 75.1 per cent based on adjusted GRI (gross rental income) are multinational corporations and major consumer and logistics industry players that include Stanley Black & Decker, Beaulieu of Australia Pty Limited, Clifford Hallam Healthcare Pty Limited and CEVA Logistics (Australia) Pty Ltd.

Robert Wallace, chief executive of the Reit manager, said the proposed transaction "will add further diversity to our quality tenant base and increase rental contributions from consumer sector tenants".

"These modern industrial properties, which are 100 per cent leased or pre-committed to incoming tenants, are also expected to be distribution per unit accretive."

The manager said the proposed deal will improve the lease expiry profile of FLT, reducing the percentage of lease expiring in the next two years ending September 2018 and September 2019 from 3.6 per cent and 14.9 per cent to 3.3 per cent and 13.7 per cent, respectively.

Funding for the acquisitions may be through borrowings entirely or a combination of borrowings and equity, FLT's manager said.

It added that after the proposed deal, the total value of FLT's portfolio will increase by 9.7 per cent to about A$1.9 billion from A$1.74 billion and FLT's portfolio will enlarge from 54 to 61 properties.

Gross leasable area is expected to go up by 10.1 per cent to about 1.35 million square metres from 1.23 million square metres.

The aggregate acquisition amount was negotiated on a willing-buyer and willing-seller basis, and is supported by independent valuations by CBRE Valuations Pty Ltd, Savills Valuations Pty Ltd and Urbis Valuations Pty Ltd.