Frasers Logistics & Commercial Trust downgraded by Daiwa

An artist's impression of the property under development at Worcester Six, a new business park in West Midlands, U.K. Frasers Logistics & Commercial Trust entered a deal to acquire the development property in late November 2021. Credit: FLCTAn artist's impression of the property under development at Worcester Six, a new business park in West Midlands, U.K. Frasers Logistics & Commercial Trust entered a deal to acquire the development property in late November 2021. Credit: FLCT

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.