Frasers Logistics & Commercial Trust (FLCT) (specifically, FLCT Treasury Pte. Ltd.) plans to issue new SGD 8.5y senior unsecured bonds at an initial price guidance of 2.70% for accredited and institutional investors only. The bonds will be guaranteed by Perpetual (Asia) Limited in its capacity as trustee of FLCT. The guarantor is rated BBB+ (Stable) by Fitch, while the new issue is expected to be rated BBB+ by Fitch as well. The bonds will also come with a make-whole call option until the maturity date. Proceeds from this issuance will be used for the refinancing of existing borrowings, financing or refinancing of acquisitions, investments, asset enhancement works and developments, which FLCT and its subsidiaries may pursue from time to time as well as working capital requirements and the general corporate purposes of FLCT and its subsidiaries.
Financial Highlights
Note: FLCT’s financial year ends in September each year. This article will refer to 1H FY2025 (“1H25”) for financial performance and 3Q FY2025 (“3Q25”) data for portfolio overview, which will refer to periods ending in March 2025 and June 2025 respectively. Percentage changes listed will be on a year-on-year basis (“YoY”).
As of 31st March 2025 (“1H25”), FLCT’s revenue increased by 7.5% YoY to SGD 232m (1H 24: SGD 216m). Net property income also increased by 5.4% YoY to SGD 167m (1H 24: SGD 159m). Reported net income, however, decreased by 5.2% YoY to SGD 103m (1H 24: SGD 109m), mainly due to a high increase in finance costs, with a 35.0% YoY increase to SGD 39m (1H 24: SGD 29m). Management attributed the increase in finance costs to additional borrowings drawn for acquisitions, asset development initiatives, and refinancing activities. The year-on-year increases in revenue and net property income were mainly due to full contributions from Ellesmere Port upon practical completion in December 2023 and from the acquisition of interests in four German logistics properties in March 2024, as well as contributions from the Maastricht Property in the Netherlands, which achieved practical completion in October 2024, and from the acquisition of 2 Tuas South Link 1 in November 2024.
As of 31 June 2025 (“3Q25”), FLCT maintains a well-diversified portfolio across five developed markets: Australia (46% of portfolio book value), Germany (26%), Singapore (12%), the United Kingdom (11%), and the Netherlands (5%). The portfolio comprises 114 investment properties with a total book value of SGD 6.9bn. FLCT’s assets are split between two main sectors: Logistics & Industrial (73% portfolio book value) and Commercial (27%).
In 3Q25, FLCT reported strong portfolio rental reversions of +30.7% YoY on an average-vs-average basis (i.e. calculated using the midpoint gross rent of each lease including step-ups and incentives). Its overall portfolio occupancy rate also remained high at 93.9% (3Q24: 95.0%). The company also has a well-spread lease expiry profile over the next 10 years across both of their sectors, with a portfolio weighted average lease expiry of approximately 4.65 years, ensuring consistent rental cashflows for the business.
Credit Highlights
We note that the credit profile of FLCT has deteriorated slightly in their 1H25 results. In 1H25, FLCT reported a higher aggregate leverage of 36.1% (1H24: 32.7%) and an interest coverage ratio of 4.5x (1H24: 5.9x). Total debt levels have increased by 8% YoY to SGD2,607m as of 31st March 2025 (1H24: SGD 2,413m) due to the reasons as listed above.
The company has a decent debt maturity profile, with only 40% of total debt to mature in the next 3 financial years (FY25, FY26, and FY27) at SGD 1,081m (1H25 total debt: SGD 2,482m) and short-term debt balance of SGD 623m. We are of the opinion that FLCT is still well equipped to deal with their near-term debt maturities, with 1) a healthy cash balance of SGD 132m, 2) stable net cashflow from operations, and a total of SGD 690m worth of undrawn facilities (As of 1H25).
Additionally, FLCT’s assets can still act as a source of capital if needed, as only certain investment properties in their European portfolio have been secured against, suggesting that FLCT can use other investment properties as collateral for additional financing if needed in a downside case. As a whole, we still find comfort in FLCT’s credit profile and credit rating despite a slight downturn in credit metrics.
Thoughts on new issue
Table 1: Comparison against peers
|
Bond Name |
Years to call / maturity |
Ask Price |
Yield to call / maturity |
|
FLCT’s new bond |
8.5 |
100.00* |
2.70% |
|
3.0 |
100.25 |
2.09% |
|
|
3.6 |
105.88 |
2.13% |
|
|
8.6 |
109.70 | 2.62% | |
| CAPITA 3.750% 10Jul2034 Corp (SGD) |
9.0 |
110.00 | 2.49% |
|
Source: Bondsupermart, iFAST compilations. Data as of 11 August 2025. * Not yet issued, yield based on initial price guidance (might be subject to change) |
|||
We think the new issue’s IPG of 2.70% is fairly priced, considering its longer tenor, as compared to FLCT’s other shorter tenor outstanding bonds. Given the IPG, we estimate the new issue to have a spread of 80 – 90 bps over Singapore government securities of similar tenor, which is in line with spreads for FLTSP 2.180% 26Jul2028 Corp (SGD) and FLTSP 3.830% 26Mar2029 Corp (SGD). We note that the final price guidance (FPG) is likely to come in lower than the IPG.
We note that the bond is also fairly priced when compared to industry peers of the similar tenor.
Overall, the credit profile of FLCT remains stable and we find its new issue to be fairly priced. The new issue will be more suitable for investors looking at longer-dated SGD bond, particularly one with credit rating.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.
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