FLCT to acquire 89.9% interest in 4 logistics assets in Germany from sponsor

FRASERS Logistics & Commercial Trust (FLCT : BUOU 0%) is acquiring an 89.9 per cent interest in four logistics assets in Germany from its sponsor, Frasers Property : TQ5 0%.

On Friday (Mar 15), FLCT said the agreed property purchase price of 129.5 million euros (S$188.9 million) represents a discount of 5.3 per cent to the assets’ value as appraised by Colliers, and a 1.1 per cent discount to the value as appraised by CBRE.

The acquisition is expected to be distribution-per-unit and net-asset-value accretive to the real estate investment trust (Reit).

After adjusting for Frasers Property’s equity interests in the companies that hold the properties and accounting for inter-company loans, the purchase consideration comes in at around 118.7 million euros.

FLCT intends to fund the transaction, which is expected to complete by end-March, through external debt financing.

Upon completion of the acquisition, FLCT’s portfolio occupancy would increase to 95.9 per cent as at end-2023; its logistics and industrial portfolio remains at full occupancy.

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Its overall portfolio weighted average lease expiry (Wale) would be unchanged at 4.4 years.

Frasers Property said in a statement on the same day that it planned to use net proceeds from the sale for working capital purposes, including repaying and servicing borrowings.

It added that the divestment was in line with its capital recycling strategy, which would enable Frasers Property to both optimise capital productivity and support the growth of its Reits.

The properties in Germany comprise four buildings with a total gross net lettable area amounting to 72,422 square metres as at end-2023.

Noting the assets’ Wale of 6.1 years and consumer price-linked indexation incorporated in the leases, FLCT’s manager said the Reit would benefit from rent escalation by acquiring the properties.

Three of the assets – located in Egelsbach, Saarwellingen and Uberherrn – are freehold and within the “Blue Banana” region in Europe, which has a population of around 110 million.

The asset in Hamburg, close to the port of Hamburg, is a leasehold property.

Anthea Lee, chief executive of FLCT’s manager, said the acquisition of these properties comes as the Reit increases its proportion of logistics and industrial assets in its portfolio.

“The proposed acquisition demonstrates FLCT’s ability to tap our sponsor’s pipeline, and this deal size enables the manager to execute the transaction in a timely manner, to secure additional income streams from the logistics and industrial sector,” she said.

Units of FLCT ended S$0.02 or 1.9 per cent lower at S$1.02 on Friday; Frasers Property shares closed S$0.005 or 0.6 per cent lower at S$0.83.