Frasers: Transfer of Coverage, SGD 1.72 FVE; Unlocking Value With Cross Street Exchange Divestment

We are transferring coverage of Frasers Logistics and Commercial Trust, or FLCT, with no-moat and stable moat trend ratings. We raised our fair value estimate to SGD 1.72 from SGD 1.68 following an update to our model to reflect the recycling of capital unlocked from Cross Street Exchange into higher yielding investments. We have also factored in a higher near-term cost of debt to take into account future interest rates hikes. Our valuation implies a forward dividend yield of 4.6% in 2022. We think the units are attractive at the current price, and we like the portfolio's shift toward higher weight in logistics and industrial assets that benefits from the strong secular tailwinds of e-commerce, which drive leasing demand.