FLT buying 21 Europe properties worth $964m

A DSV Solutions facility in the Netherlands. DSV Solutions is among the big names that are tenants of FLT’s acquisitions in Germany and the Netherlands. The new predominantly freehold properties have about 595,000 sq m in gross lettable area and a 100 per
A DSV Solutions facility in the Netherlands. DSV Solutions is among the big names that are tenants of FLT’s acquisitions in Germany and the Netherlands. The new predominantly freehold properties have about 595,000 sq m in gross lettable area and a 100 per cent occupancy ratePHOTO: FRASERS LOGISTICS AND INDUSTRIAL TRUST

Deal will lift portfolio from $1.9b to about $2.9b, and from 61 to 82 properties

Frasers Logistics and Industrial Trust (FLT) is making its first foray into Europe with the acquisition of 21 German and Dutch properties worth €596.8 million (S$964 million) in total.

Mr Robert Wallace, chief executive of the trust’s manager, told a briefing that a huge push into the market was needed because Europe requires significant economies of scale and a platform presence.

“If you go on a piecemeal basis, you get pushed around to a certain extent, and you will not have market prominence to get the results that you need,” he added.

The 21 properties are being acquired at a purchase consideration of €316.2 million from FLT’s sponsor, Frasers Property, through its Dutch wholly owned subsidiary Frasers Property Investments (Holland).

They comprise 17 properties in Germany and four in the Netherlands, with tenants representing a mix of industries such as logistics services, automotive, food logistics and industrial manufacturing. They include big names like BMW Group and DSV Solutions.

The new predominantly freehold properties have about 595,000 sq m in gross lettable area (GLA) and a 100 per cent occupancy rate with a weighted average lease expiry of eight years, said FLT. The deal will lift its portfolio from A$1.9 billion (S$1.9 billion) to about A$2.9 billion, and from 61 to 82 properties.

The GLA will rise from 1.3 million sq m to 1.9 million sq m, with the proportion of freehold assets rising from 60 per cent to 71 per cent.

The acquisition is expected to be completed by June, subject to FLT unit holders’ approval at an extraordinary general meeting and equity fund raising.

FLT has proposed a private placement of new units to institutional and other investors and/or a nonrenounceable preferential offering of new units to existing unit holders on a pro rata basis.

Sponsor Frasers Property has shown its support for the acquisition by undertaking to subscribe for its pro-rata interests in FLT.

Frasers Property holds an aggregate direct and indirect interest in over 309 million units, equivalent to around 20 per cent stake of FLT.

The balance of the transaction cost will be funded by borrowings, said FLT. It expects gearing ratio to go up from 30.9 per cent to 36.8 per cent.

FLT said it has a right of first refusal to buy six more Frasers Property’s European assets with a total GLA of 389,100 sq m. There is also a potential addition of another 17 assets, which could all indicate more growth in the pipeline for Europe.

Mr Wallace said the move towards Europe does not mean FLT is ignoring the Australian market.

“I must emphasise again that Australia will always be a key market for the company because we got such a good platform there.”

FLT units closed down one cent at $1.08 yesterday.

A version of this article appeared in the print edition of The Straits Times on April 21, 2018, with the headline 'FLT buying 21 Europe properties worth $964m'. Print Edition | Subscribe