Frasers Logistics & Commercial Trust expects near- to mid-term impact on retail components of portfolio

THE Covid-19 pandemic has not had a material impact on the portfolio of Frasers Logistics & Commercial Trust (FLCT) to-date, said its manager in a business update on Wednesday.

In a bourse filing late on Wednesday, FLCT's manager said that Covid-19's impact on its distributable income in the first quarter of FY21 was approximately S$0.7 million, which has not been material for the real estate investment trust (Reit). This mainly includes rental waivers granted and Covid-19-related provisions.

However, the manager said that a near- to mid-term impact on the retail components of its Singapore and Australian portfolio is expected. It noted that the commercial portfolio remains largely stable, with the retail segment representing "just 2.4 per cent" of FLCT's overall income.

Meanwhile, FLCT's manager expects impact to be "limited" on its industrial properties in Australia, Europe and the UK. It is actively monitoring the impact of the latest UK national lockdown on the physical occupancy and performance of the UK properties.

It is more optimistic about the demand for its logistics and suburban office spaces, saying that structural changes driven by the growth of e-commerce activities and the "hub-and-spoke" trend are expected to drive demand for these spaces respectively. FLCT's logistics portfolio continued operating during the pandemic, it added.

Overall, FLCT's portfolio performance was "stable" during the quarter and was underpinned by active lease management, with new leases and renewals amounting to 63,546 sq m of space or 2.9 per cent of the Reit's lettable area. FLCT recorded a portfolio rental revision of -6.9 per cent for Q1 FY21, down 2.1 per cent for the 12-month period to Dec 31.

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FLCT's occupancy rate stood at 97.2 per cent, and the weighted average lease expiry was 4.8 years. The manager said FLCT has a well spread-out lease expiry profile, with 5.5 per cent of gross rental income (GRI) due for renewal in FY21.

Eight industrial and 40 commercial leases are expiring in FY21, but each accounts for less than or equal to 0.4 per cent of GRI.

The manager also added that FLCT had a "well-spread" weighted average debt maturity profile of 3.1 years as at Dec 31, and is "confident" on refinancing the debt maturing in FY2021 with existing undrawn and new facilities. FY2021 borrowings are expected to be partially paid down, with proceeds from the divestment of its ownership in three leasehold industrial properties in South Australia, it said.

Its debt headroom stood at S$1.8 billion, prior to reaching the 50.0 per cent aggregate regulatory leverage limit.

Units of FLCT fell one Singapore cent or 0.69 per cent to close at S$1.45 on Wednesday.