Daiwa downgraded Frasers Logistics & Commercial Trust (FLCT) to Outperform from Buy, saying the REIT appeared to have fewer opportunities to make a significant acquisition from its sponsor’s logistics and industrial pipeline.
That was due to significant cap rate compression in the prime logistics space, Daiwa said in a note Wednesday.
But the investment bank noted distribution per unit (DPU) accretive acquisitions are still possible and FLCT does have low gearing, as well as a relatively attractive 12-month forward DPU yield of 6 percent.
Still, Daiwa cut its target price for the REIT to S$1.50 from S$1.67 on a higher 10-year bond yield assumption. The bank also cut its fiscal 2023-2024 DPU estimates by 0.4 percent to 0.9 percent.
In May, FLCT said it entered a deal to buy a commercial property in Mount Waverley, Victoria, Australia for A$60.25 million.
The REIT’s units ended Thursday at S$1.34, down 0.74 percent.
