Frasers Logistics Commercial Trust: 2H26 briefing takeaways – Positive thesis remains intact

Takeaways from FLT's 2H26 results briefing include: (1) portfolio fundamentals remain healthy, with rents ~9% below market; (2) ATP occupancy should continue improving following successful backfilling of the former Google space; (3) downside risk from 2 Tuas South Link is mitigated by income support; (4) higher cost of debt is in line with expectations; (5) the proportion of management fees paid in units will be maintained, with capital top-ups capped at no more than 5% of total distributions; and (6) cap rate expansion for commercial property valuations. Overall, we remain constructive on the recovery in FLT's core DPU into FY27. The key drivers remain intact, including higher ATP occupancy and incremental income contribution from the recent European acquisitions, while the borrowing cost trajectory is broadly as expected. While vacancy at 2 Tuas South Link is an incremental negative, this is partly offset by ongoing income support and better-than-expected occupancy at FLT's UK busine