FLCT second-half DPU down 6.6% on lower income, higher expenses

SINGAPORE – Frasers Logistics & Commercial Trust (FLCT) posted a distribution per unit (DPU) of 3.52 cents for the second half ended September, down 6.6 per cent from 3.77 cents in the year-ago period.

This was mainly due to lower income and higher expenses compared with the year prior, said the real estate investment trust’s (Reit) manager on Thursday.

FLCT’s revenue for the second half fell 0.8 per cent on the year to $212.8 million from $214.5 million previously.

Net property income was down 4.9 per cent to $157.1 million from $165.2 million the previous year.

The fall across topline figures was mainly attributed to weaker exchange rates of the Australian dollar versus the Singapore dollar, coupled with a decline in revenue and lower average occupancies at Maxis Business Park and 357 Collins Street.

Property operating expenses rose 13 per cent over the half-year period to $55.7 million from $49.3 million a year ago due to higher energy and utility expenses.

These were, however, partially offset by the full six-month effect of the acquisition of four properties in Australia, as well as a full six-month contribution from the practical completion of two logistics and industrial properties in Britain.

Finance costs widened 29.7 per cent to $25 million from $19.3 million as a result of higher interest rates and additional borrowings drawn.

As a result, distributable income for the second half fell 5.8 per cent to $131.6 million versus $139.6 million in the previous year.

This brought FLCT’s DPU for the full year to 7.04 cents, representing a 7.6 per cent decline from 7.62 cents for the previous year.

“Operating in the current economic climate remains challenging, as continued uncertainty around long-term rates and translation impact of our foreign-sourced income placed pressure on FLCT’s financial performance in financial year 2023,” said Ms Anthea Lee, chief executive of the manager.

FLCT’s portfolio occupancy as at end-September stood at 96 per cent, with a portfolio weighted average lease expiry of 4.3 years.

Net asset value per unit was $1.17, down from $1.30 in financial year 2022.

The Reit’s aggregate leverage stood at 30.2 per cent, with a weighted average debt maturity of 2.2 years and an interest coverage ratio of 7.1 times.

Looking ahead, the Reit manager said it will maintain its efforts in improving occupancies for FLCT’s commercial assets.

It will also continue to work on cost-optimisation initiatives, while remaining vigilant on the movement of energy prices.

The manager also said it will evaluate appropriate hedging strategies for energy contracts to mitigate the impact on its operating expenses.

Units of FLCT closed 3.9 per cent higher at $1.08 on Thursday.

THE BUSINESS TIMES