Frasers Logistics prices Singapore IPO at top end of range, to raise S$903m

Frasers Logistics and Industrial Trust is set to raise about S$903 million ($666 million) after pricing its Singapore initial public offering at the top of its indicative range in the country’s biggest new listing in three years.

The real estate investment trust (REIT) said in a filing on Friday (Jun 10) that it is selling 521.7 million units – priced at 89 cents apiece – to institutions and retail investors.

It will also be the largest initial pure-play Australian logistics and industrial REIT to be listed on the Singapore Exchange (SGX).

All 51 properties under Frasers Logistics and Industrial Trust are located in Australia and are valued at almost S$1.6 billion. Going forward, the REIT manager said it is looking to expand beyond its initial Australian focus.

Said Mr Robert Wallace, CEO of Frasers Logistics & Industrial Asset Management: “There is visible growth available to the portfolio not just from the development platform but also from another nine assets that are being held on balance sheet at this point of time of Frasers Property Australia.

“Certainly in the longer-term future, given the strength of the sponsor, being Fraser Centrepoint Limited, there will be opportunities elsewhere potentially around Asia. The sponsor has a very good presence in Singapore, but I can see opportunities potentially being in markets such as Thailand, Malaysia and Vietnam.”

The REIT is projecting a distribution yield per unit of 6.83 per cent for 2016 and 7.3 per cent for 2017.

Mr Liu Jinshu, director of research at NRA Capital, noted: “Industrial REITs on average generally yield between 6.4 per cent and up to 8 per cent. So in terms of yield, I think it’s priced fairly reasonably. If you look at weighted average lease to expiry, it’s about seven years. Seven years is quite decent. So to some extent, I think the REIT can sustain its dividend yield at the current offer price.”

It is the second mainboard IPO on the SGX this year. Despite recent market volatility, observers said they expect to see retail investor interest, amid the search for yield. However, they also cautioned retail investors of potential currency risks.

Mr David Kuo, CEO of The Motley Fool Singapore, commented: “It’s being sold at a price to book of about 1. So therefore you’d say everything there, all the metrics actually look quite good. In the case of Frasers Logistics, what you actually have with that is a little bit of currency risk as well.

“So people need to bear that in mind. Because what would happen if the Australian dollar were to fall against the Singapore dollar? How would that affect the returns you’re going to get from your investment? So people have to balance a number of things.”

The REIT is expected to have a market capitalisation of S$1.27 billion at listing.

Join The Discussion

Compare listings