Frasers to list Aussie assets in $1.2b Reit

Property group Frasers Centrepoint (FCL) is giving investors welcome excitement with the largest proposed initial public offering (IPO) here since 2013.

It is placing some of its Australian industrial properties into a real estate investment trust (Reit), which will be the largest one with pure-play Australian industrial property investment to list here.

The Reit, Frasers Logistics and Industrial Trust (FLT), aims to raise gross proceeds of $1.211 billion to $1.268 billion. The figures include money from its sponsor FCL; TCC Group, a majority shareholder of FCL; and 15 cornerstone investors.

It is the largest IPO here since Asian Pay Television Trust's offering of $1.39 billion in May 2013.

"This lodgement is a positive sign for the market. For the whole of last year, there was just one mainboard listing, BHG Retail Reit, but the offer size was just $395 million, compared with Manulife US Reit at $700 million last month and the planned offering size of FLT," said Ms Tay Hwee Ling, a partner in global IFRS and offerings services at Deloitte Singapore.

Units under FLT's offering are expected to be priced at 85 cents to 89 cents. The distribution yield is forecast at 6.9 per cent to 7.1 per cent this year and projected to be 7.3 per cent to 7.5 per cent next year.

Analysts said the yield is attractive and the portfolio is strong. They also noted the strong list of cornerstone investors, including Morgan Stanley Investment Management and Lion Global Investors.

The public offer - the second mainboard IPO so far this year - opens next Friday, with listing targeted for June 20. FCL is both sponsor and manager of the Reit.

The initial portfolio will comprise 51 industrial properties in Australia with an appraised value of about $1.6 billion and total gross lettable area of about 1.2 million sq m. These are part of assets acquired by FCL when it bought Australand in 2014.

The IPO properties are in Melbourne, Sydney, Brisbane, Adelaide and Perth. The portfolio has an occupancy rate of 98.3 per cent and a weighted average lease expiry term of 6.9 years.

FLT also has call options to acquire up to three more industrial properties in Australia that are under development. It has a further nine completed properties owned by FCL to which it will have the right of first refusal.

FLT is the fourth listed trust to be formed by FCL, after Frasers Centrepoint Trust, Frasers Commercial Trust and Frasers Hospitality Trust.

Analysts said the yield is attractive and the portfolio is strong. They also noted the strong list of cornerstone investors, including Morgan Stanley Investment Management and Lion Global Investors.

Ms Tay, whose firm is handling the potential listing of a few more Reits and business trusts, said the proposed FLT listing comes as encouragement that there is capacity and liquidity in the market to take up offers.

"Firms are trying to list as soon as they can, bearing in mind a potential rise in interest rates."

A version of this article appeared in the print edition of The Straits Times on June 04, 2016, with the headline 'Frasers to list Aussie assets in $1.2b Reit'. Print Edition | Subscribe