Frasers Logistics & Commercial Trust grows presence in Europe with 4 property acquisitions
The agreed purchase price of about 294.9 million euros represents a 1.5% discount to their appraised value
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[SINGAPORE] Frasers Logistics & Commercial Trust ( FLCT ) has acquired equity interests in four property-holding companies, the real estate investment trust’s (Reit) manager said on Monday (May 25).
The four companies collectively own two freehold logistics properties in Germany and two in the Netherlands. The agreed purchase price for the four properties is around 294.9 million euros (S$441.5 million), the manager said.
This represents a 1.5 per cent discount to their appraised value and a 0.9 per cent discount to the average of two independent valuations for each property.
The manager has entered into share purchase agreements with subsidiaries of sponsor Frasers Property (FPL) and a third party unrelated to FLCT and FPL. The total consideration for the proposed acquisition is about 218.1 million euros.
Anthea Lee, CEO of the manager, said the proposed acquisition “allows FLCT to deepen its presence in two of Europe’s most resilient and trade-oriented logistics markets”.
She noted that the deal is also “consistent with our strategy to scale our logistics and industrial portfolio”, and is expected to be accretive to FLCT’s distribution per unit.
She added that the portfolio offers “some embedded rental upside, providing reversion potential as leases expire”.
The four new properties are freehold assets with a total gross lettable area of about 179,645 square metres.
They are fully leased, with tenants including multinational corporations and third-party logistics providers serving new economy sectors such as e-commerce fulfilment.
The properties have a weighted average lease expiry (Wale) of 5.7 years, and are expected to “benefit from rent escalation through consumer price index-linked indexation or fixed escalations incorporated in their leases”.
The manager added that the portfolio also offers potential upside from rental reversions as leases expire.
Located within key logistics hubs in Germany and the Netherlands, the properties support the “the core distribution needs of both countries and (complement) the existing European properties in FLCT’s portfolio”, which was fully occupied as at Mar 31, the manager said.
Both markets, it added, have “experienced strong logistics real estate fundamentals, with prime rents increasing significantly across key submarkets over the past five years”.
After the deal is completed, FLCT’s portfolio occupancy is expected to improve from 96.1 to 96.3 per cent, while the proportion of logistics and industrial assets in its portfolio will rise from 75.1 to 76.6 per cent.
The enlarged portfolio’s Wale is expected to strengthen to 4.9 years. The number of properties in FLCT’s portfolio will increase to 118.
The manager said that the acquisition will be funded through external debt financing and is expected to be completed by August. It is subject to approval in principle from the Singapore Exchange and unitholders.
A circular will be issued to unitholders and an extraordinary general meeting will be convened, it added.
Units of FLCT closed flat at S$0.98 on Monday, before the news.
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