Frasers Logistics & Commercial Trust H1 DPU drops 1.7% to S$0.0295

[SINGAPORE] Frasers Logistics & Commercial Trust (FLCT) reported a 1.7 per cent drop in its distribution per unit (DPU) to S$0.0295 for its first half ended Mar 31, 2026, from S$0.03 the year before.

Distributable income for the period declined 1 per cent year on year to S$111.9 million from S$113 million. The decline in DPU was due to a lower capital distribution of S$6.6 million in H1 2026 compared with S$19.5 million in H1 2025.

The distribution will be paid out on Jun 22.

In a statement on Tuesday (May 5), the manager reported that revenue for H1 was up 2.8 per cent at S$238.9 million from S$232.3 million in the year-ago period. 

Net property income (NPI) grew 4.1 per cent on the year to S$174.1 million from S$167.4 million.

Excluding straight lining adjustments for rental income and adding lease payments of right-of-use assets, its adjusted NPI grew 3.6 per cent to S$167 million from S$161.3 million. 

The real estate investment trust’s (Reit) manager attributed the higher revenue and adjusted NPI to positive rental reversions of 8.8 per cent on an incoming versus outgoing rent basis, and annual rent increments in the Australian and European logistics and industrial segments. 

Performance was also boosted by a full six-month contribution from 2 Tuas South Link 1 and favourable exchange rate movements. 

These gains were partially offset by the divestment of 357 Collins Street in September 2025, higher vacancies at Alexandra Technopark and Farnborough Business Park, and increased non-recoverable land taxes in Australia, the manager said.

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Anthea Lee, CEO of the manager, noted that the portfolio demonstrated resiliency despite “geoeconomic confrontations, elevated interest rates and currency headwinds”, with the logistics and industrial portfolio serving as a crucial performance driver. FLCT recently completed a 43 million euro (S$64.1 million) acquisition of a freehold logistics property at Diamantweg 26 in the Netherlands, which is 100 per cent occupied with a weighted average lease to expiry (Wale) of 9.5 years.

As at Mar 31, 2026, the group’s portfolio occupancy stood at 96.1 per cent with a Wale of 4.9 years. Aggregate leverage remained healthy at 33.7 per cent with an interest coverage ratio of 4.4 times.

In Australia, the manager expects the industrial sector to remain resilient due to a slow supply pipeline, structurally favourable demand drivers, and the sector’s defensive income profile, despite cautious occupier decision-making driven by rising inflation and a softer macroeconomic outlook.

The office market continues to face challenges with elevated vacancy rates, though premium-grade assets in Perth are outperforming secondary stock due to tenant flight-to-quality.

For the European and UK markets, healthy demand is anticipated for German and Dutch logistics assets, supported by a shrinking development pipeline and structural demand tailwinds including defence spending and e-commerce expansion.

However, UK out-of-town office locations remain challenging with elevated vacancy rates, while the European investment market remains muted due to global economic uncertainty.

In Singapore, the manager noted that demand for prime logistics warehouse space remains healthy with high occupancy of 95.8 per cent, while the business park market remains muted as occupiers right-size and consolidate operations.

“The Reit manager expects global growth to generally weaken in 2026,” the statement read. “The longer the Middle East conflict persists, the greater the downside risks, potentially tipping the global economy into recession.”

“Asset valuations may face pressure as bond yields remain elevated; however, the structural case for prime logistics and industrial assets remains compelling, underpinned by long-term tailwinds such as e-commerce growth, supply chain resilience, nearshoring and the energy transition,” the manager said.

“To date, FLCT has seen no material impact on operations, occupancy or leasing commitments from the current geopolitical and trade environment,” it added.

Units of FLCT closed S$0.01 or 1 per cent higher at S$0.97 on Monday.