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The Frustrating Frasers Logistics and Industrial Trust EGM

I attended the EGM for Frasers Logistics and Industrial Trust for their purchase of a portfolio of completed and in development properties.

I have to say it is rather frustrating.

I will keep this post short.

Here are some of the key takeaways.

3 Questions were raised whether future dividend per unit (DPU) will be diluted.  The whole Q&A session was center around one slide.

This is a slide that the CEO Robert Wallace say is a regulatory demand and an unfair reflection of the actual situation.

It states that after the completion of the properties, based upon the same measured period, the distributable income of FLT to shareholders will drop and so will the DPU.

Understandably, the shareholders become worried and have their guard up on

  1. asset dumping
  2. existing shareholder dilution
  3. dividend yield going down

One shareholder also made a point that Singapore shareholders will only turn to a trust if the dividend yield is above 5%, failure which they will go and buy a normal company.

The CEO, the Chairman and FCL CEO Panote took turns to parry these questions.

The shareholders would like to know if the future DPU is going to be higher definitely, whether there will be dilution.

Mr Wallace could not give a definite answer. And the hearsay after the meeting is that the shareholder isn’t very pleased.

If you ask me, could you make that kind of promise that in the future, the DPU will definitely be accretive?

I don’t think you could.

Shareholders are looking for the management to put their reputation on the line. And the management refused to do it.

What shareholders was not happy with is that

  1. you raise money to purchase development properties
  2. the development properties will take few months to a year to completion and there will be absence of rent
  3. this will be dilutive

Now I wonder how many shareholders who attended the meeting actually read the circular.

In the circular, the section above states that upon the practical completion of the property, the developer (the sponsor FCL) will invoice FLT to pay the balance, after deducting interest coupon equivalent to the NPI yield of each development property.  This means that during the period of development, FLT will be income supported by the Sponsor.

Further in another section, it is stated that should there be overrun of development, the sponsor will reimbursed FLT. If the properties become vacant, FCL will procure the leasing.

It more or less show that they are provided cash flow or a discount on purchase price such that these development properties are earning upon the completion of sale.

Now, these may not be the most easily understandable.

However, this could be brought up in the meeting. But none of those asking questions show that they have read this portion of the documents.

Going for Equity and Debt Growth. One shareholder asked about the future growth of FLT. Specifically, how much do they intend to leverage up and how much they could leverage up for growth. Mr Wallace’s answer is that while debt looks very appealing, the are cognizant of the issue of having too much debt.

Going by his answer, it is likely that they are going for future equity and debt financing.

And judging by their tone, they are intending to grow FLT to such an equity base such that they will be added to an index.

Catering Failure. Being perhaps their maiden general meeting, I have to say FLT didn’t handle the hungry ghost shareholders very well. You see many shareholders packing foods, knocking others off their balance in their question to get much food. Instead of being considerate, they packed 7 satays in front of other shareholders, who were lambasting them for their behavior. And yet they continue to do it. Other management teams have address this by doing away with food, or having more people to control it.  We hope that over time, they will learn about this.



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Dividend Knight

Monday 30th of April 2018

Hi Kyith, I am vested in FLT too... Regarding the latest acquisition of European logistics assets, the powerpoint slides showed the post-acquisition DPU would increase to 18.3 cents per quarter. Is this the ACTUAL DPU we would receive after the rights issue? I thought DPU would usually decrease due to the rights being listed? I was predicting DPU per quarter to be around 13.6 cts after adjusting for rights. Need your advice on this. Thanks! ^^


Tuesday 1st of May 2018

Hi Dividend Knight, when they say its accretive, likely the dpu will not go down all else being equal. Their last quarter dividend is 1.8 cents so if you add 1.7% to it its about there.

I think I would write a post on this, even though I didn't want to come up with one in the first place.


Friday 28th of July 2017

Why didn't you bring that up yourself?


Friday 28th of July 2017

Hi X, bring up which part?


Thursday 27th of July 2017

Thank you for the analysis. It is always good to remind these managers that their job is to preserve and increase the DPU's, they tend to foget, especially when their own remuneration is more aligned to AUM.

Any thoughts on what being added to an index would mean? I would expect there would be a rise in unit price with the attendant drop in DPU. But who knows?

Pity about those on a over-enthusiastic quest for food. Hope you managed to pick up a couple of satays......


Friday 28th of July 2017

You could raise the question, but you do not have to do it three times. I think it could mean a more diversified portfolio. I do not think they have adequate accretive assets in this climate, unless the dividend yield of the REIT trades at 5% yield. Acquisitions will have to lean towards more debt.

Best Regards,


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