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Frasers Logistics Trust: Another largest investment.

Monday, May 30, 2022

This is just a quick update on my investment in Frasers Logistics Trust.

I didn't do anything to my investment in Frasers Logistics Trust since I got in at 92.5c a unit in January 2017.

At least I don't remember having done anything to it since then.

Well, I must correct myself because after so many years, I finally did something to it.

As one of my larger smaller investments for a long time, I didn't have to make a large purchase for it to join the ranks of my largest investments.

In case you don't already know, I consider any position that has a market value of $100,000 or more in my portfolio as large.

The numbers look pretty good.

(Presentation: May 2022.)

I don't usually like paying a premium to NAV when it comes to REITs.

However, when I first invested in Frasers Logistics Trust in 2017, I paid a premium of around 6% to its NAV then, if I remember correctly.

At that time, I decided that it was a price I was willing to pay for geographical diversification and also to have greater exposure to freehold assets.

So, increasing exposure last week to Frasers Logistics Trust when it was trading very close to or at its NAV was more palatable.

I will keep a lookout for a chance to add to my investment in Frasers Logistics Trust at under $1.20 a unit.

That means roughly a 10% decline in unit price from here.

Technically, it is a definite possibility as the momentum oscillators are not encouraging.

Fundamentally, if risk free rate continues to go up, we could see unit prices of REITs like Frasers Logistics Trust declining as investors might demand from them a high distribution yield.

Although buying at a discount to NAV would make me quite happy, I remind myself that NAV could decline as we could see cap rate expansion taking place if risk free rate continues to go up.

Don't throw in everything including the kitchen sink because peace of mind is priceless.

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David said...

Thanks, AK.
FLT closed at $1.28 Today.
Lower than NAV $1.32. $1.28 is also 1-Year Low.
You are right, i notice they have been expanding in Australia.

Best Regards

AK71 said...

Hi David,

I would be quite happy if FLT's unit price doesn't go to where I would add to my position but it seems that Mr. Market could be demanding a higher distribution yield.

KC said...

Hi AK,

Could you talk to youself about FLCT? I dont think anything has changed fundamentally for this reit but its price has fallen significantly more than similar reits like ascendas.

Apart from Fx, what other factors could explain this drop?

Thank you

AK71 said...

Hi KC,

If I were to hazard a guess, I would say that sentiments towards REITs have been pretty negative.

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