Yesterday, Frasers Centrepoint Ltd (SGX: TQ5) announced an update on its plans to list a new real estate investment trust in Singapore.
At the moment, Frasers Centrepoint has three Singapore-listed REITs and stapled trusts under its umbrella and they are Frasers Centrepoint Trust (SGX: J69U), Frasers Commercial Trust (SGX: ND8U), and Frasers Hospitality Trust (SGX: ACV).
The aforementioned update deals with the potential fourth REIT, Frasers Logistics & Industrial Trust, and it was meant to announce that bourse operator Singapore Exchange Limited has issued an eligibility-to-list letter to Frasers Centrepoint.
While the market waits for the confirmation of the listing (the issue of the eligibility-to-list letter does not mean that Frasers Centrepoint would certainly go ahead with creating a new REIT), here are three things investors need to know about Frasers Logistics & Industrial Trust.
It’s about Australia
Frasers Logistics & Industrial Trust would be focusing mainly on Australian industrial assets. Frasers Centrepoint has plans to divest some of its industrial assets in Australia into the new REIT.
The bigger picture
This is in line with Frasers Centrepoint’s strategy of recycling its capital through its various REITs. The idea is for the company to sell some of its mature assets – those with stable rental yields – to its REITs in order to unlock value.
As sponsor and manager of these REITs, Frasers Centrepoint would continue to hold a large stake in the REIT, thus allowing the company to “earn a sustainable and steady fee income stream.”
For the proposed listing of Frasers Logistics & Industrial Trust, the sponsor intends to keep a 22.5% stake in the REIT after it’s listed.
In the aforementioned update, Frasers Centrepoint reiterated the fact that the listing of Frasers Logistics & Industrial Trust is not confirmed.
But, if the listing does indeed happen, Frasers Centrepoint would become the first listed property company in Singapore’s market to be the sponsor of a full range of REITs that deal separately with retail, commercial, hospitality, and logistics & industrial assets.
The listing of Frasers Logistics & Industrial Trust seems like a logical step for Frasers Centrepoint to take. In its most recent quarter, the company had a net debt to equity ratio of around 87%. Therefore, the proceeds from the listing of Frasers Logistics & Industrial Trust might give the company more flexibility with its finances as well.
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