Frasers Logistics & Commercial Trust is acquiring its first warehouse property in the UK as part of a S$548.7 million ($412.2 million) purchase of six European assets announced to the Singapore exchange on Monday.
FLCT’s new UK prize is being picked up from local developer IM Properties as part of a 61,213 square metre (659,000 square foot) West Midlands package that also includes a 16-building business park in the town of Solihull.
The other assets in the portfolio include three warehouse properties in Germany and another in the Netherlands, all of which FLCT is buying from its Singapore-based sponsor, Frasers Property.
“The Proposed Acquisition is positioned to capitalise on strong logistics industry tailwinds,” FLCT said in a statement. The company noted that the UK and Germany are Europe’s two largest e-commerce markets, with UK online shopping penetration having increased 46 percent last year compared to 2019, while Germany experienced 20.7 growth and the Netherlands a 24.6 percent expansion.
Birmingham Industrial Play
Located near Britain’s second-largest city, Birmingham, FLCT’s UK logistics purchase is known as Connexion, which is being picked up together with the Blythe Valley Park.
The UK assets form £170.2 million (S$318.8 million) of the aggregate agreed price, while the EU properties represent €142.7 million (S$229.9 million).
Now fully occupied, Connexion is a five-building warehouse complex with 19,534 square metres of lettable area and is home to tenants including Hofer Powertrain, Lounge Underwear and fitness apparel maker Gymshark.
The neighbouring Blythe Valley Park has 41,679 square metres of lettable area and hosts offices for Lounge Underwear, Gymshark and flexible workspace provider Regus. The office park also has 3 hectares (7.4 acres) of land that could provide for development of additional logistics space.
With an average age of 2.8 years, the EU warehouses are situated near the key logistics hubs of Frankfurt and Mannheim in southwest Germany and at the Food & Business Park Ede in the east of the Netherlands.
The four properties have a total lettable area of 62,115 square metres and are close to FLCT’s existing European properties in the two countries. Key tenants include freight forwarder Hermes, chemical giant BASF and kitchen gadget maker Hendi.
In 2019, Frasers Logistics & Industrial Trust, which was merged with Frasers Commercial Trust in 2019 to form FLCT, had purchased $451 million in German and Australian warehouses from Frasers Property in a similar deal. The developer controlled by Thai tycoon Charoen Sirivadhanabhakdi had acquired German builder Alpha Industrial for $353 million in 2018, providing it with a portfolio of 22 European projects, both completed and in progress.
Catching a Tailwind
The agreed price for FLCT’s new set of assets represents a discount of 2.5 percent to the properties’ aggregate appraised value of S$562.4 million, FLCT’s manager, Frasers Logistics & Commercial Asset Management, said in a Monday release announcing the proposed acquisition. The aggregate purchase consideration, excluding acquisition fees and other transaction costs, is S$469.7 million.
Robert Wallace, the CEO of FLCT’s manager, said the new properties are complementary to the trust’s portfolio and offer “a long-term income stream from a line-up of high-quality and diversified tenants”.
Funding for the latest acquisition will come from a combination of borrowing and the proceeds of an equity fundraising to be carried out by the trust’s manager, which is a unit of Frasers Property. The transaction is expected to close by next month.
FLCT has a S$6.3 billion portfolio of 97 logistics and commercial properties in Australia, Germany, Singapore, the UK and the Netherlands.
Frasers Property had total assets of S$39.2 billion as of 31 March 2021. The group also sponsors Singapore-listed Frasers Centrepoint Trust and Frasers Hospitality Trust, in addition to a pair of Thailand-listed REITs, Frasers Property Thailand Industrial Freehold & Leasehold REIT and Golden Ventures Leasehold REIT.