Is Frasers Logistics & Commercial Trust A Good Buy In 2026? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of Frasers Logistics & Commercial Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Business Description

Frasers Logistics & Commercial Trust is an industrial and commercial REIT.

What I Like About FLCT:

• The majority of the properties are either freeholds or have a long-remaining land lease of over 75 years.
  

• Logistics and industrial properties are resilient and have high WALE
  

• Prudent capital management strategy with low gearing, high levels of interest cover ratio and low cost of borrowing (Fig 4 & 5)
  

• The tenant base is well diversified across different sectors and geography thereby presenting a low concentration risk to unitholders.
  

• A good portion of their portfolio leases are embedded with CPI-Linked indexation or fixed escalation (FY2025: 83.1%)

What I Do Not Like About FLCT:

• Exposure to foreign currencies, while inevitable, is a cause of concern, especially given the strength of the SGD against AUD & EUR.
  

• Foreign offices and business park exposure, if any, is a drag on the overall performance (IMO the merger was not for the interest of investors, but it is what it is).

Updates From Recent Performance (FY 2025)

General Comments:

• Gross Revenue increased by 5.6% mainly due to the contributions from acquired properties, but Net Income dropped by 0.8%.
  

• Reported DPU decreased by 8.54% due to higher borrowing costs and FX losses, which pushed down the operating performance and a slight decrease in the contributions from non-operating items. (Figure 7)
  

• Ongoing challenges in the commercial property sector have resulted in a continued drag on the operating performance. The management has recognised this and taken action to divest commercial assets strategically, redirecting the funds into prime L&I assets as part of their portfolio rebalancing strategy (Namely Singapore 2 Tuas South Link 1).
  

• Aggregate leverage increased by 2.70% to 35.70% due to additional borrowings drawn up for capital expenditure and acquisitions.

Positive Headwinds:

• FLCT’s logistics and industrial properties are positioned to benefit from the regionalisation trend driven by a heightened global trade tension. This will likely help drive high levels of occupancy and rent reversions in their logistics and industrial properties.

  
  

• Supply constraints in key logistical markets (notably parts of Australia and Europe) are expected to support steady rental rates.

Negative Headwinds:

• Commercial property headwinds are expected to persist which may continue to drag down the portfolio’s overall performance.

  
  

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore