SINGAPORE (Nov 6): OCBC Investment Research is keeping its “buy” call on Frasers Logistics & Industrial Trust (FLT) and raising its fair value estimate to $1.25, from $1.22 previously.

FLT “remains as one of our top picks,” says OCBC lead analyst Andy Wong Teck Ching in a report on Nov 3.

This comes after FLT posted a 4Q distribution per unit (DPU) of 1.77 cents, beating its IPO forecast by 8.6%. This brings FY17 DPU to 8.85 cents, 6.1% higher than forecast.

Gross revenue and adjusted net property income of A$42.2 million ($44.1 million) and A$32.3 million were 4.8% and 4.7% y-o-y higher than its IPO forecast, respectively.

See: Frasers Logistics reports 4Q DPU of 1.77 cents, 8.6% above forecast

“This was largely driven by inorganic growth as management had actively pursued acquisitions since its listing,” says Wong.

The analyst notes that FLT maintained a high portfolio occupancy of 99.4% with a long WALE of 6.75 years.

“Although average rental reversion was -15.9% in 4QFY17 and -8.2% for the 12-month period in FY17, we believe it was largely attributable to rents reverting back to market levels upon lease expiry as built-in annual rental escalations for FLT’s leases typically outpace market rental growth,” says Wong.

Factoring in FLT’s full-year results, OCBC is raising its FY18 and FY19 DPU forecasts by 2.3% and 2.6%, respectively, on the back of a higher AUD-SGD assumption.

As at 3.54pm, units of FLT are trading 1 cent higher at $1.14, implying an estimated distribution yield of 6.5% for FY18.