Frasers Logistics & Commercial Trust’s Revenue is Up, So Why Are Payouts Down? 4 Surprising Takeaways from Their Latest Report
For investors, rising revenue is a clear signal for rising payouts. Frasers Logistics & Commercial Trust’s (FLCT) latest FY2025 results, however, present a compelling puzzle: while revenue climbed 5.6% to S$471.5 million, the distribution per unit (DPU) fell by 12.5%. This article unpacks the deliberate strategy behind this paradox, revealing a disciplined pivot toward long-term resilience over short-term returns.
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1. The Revenue-Payout Paradox: Growing the Business vs. Growing the Dividend
A closer look at the FY2025 report reveals a stark divergence between top-line growth and unitholder distributions. Revenue grew by a solid 5.6% to S$471.5 million for the year. Yet, the total Distribution Per Unit (DPU) paid to unitholders fell by 12.5% to 5.95 Singapore cents.
This divergence is not an accident but the result of two primary factors. First, finance costs increased significantly by 26.4% year-over-year due to higher interest rates and new borrowings for strategic acquisitions, such as the prime logistics asset at 2 Tuas South Link 1. Second, and more importantly, the REIT Manager made a deliberate strategic decision to reduce the amount of “Capital Distribution” paid out from divestment gains. This was a quantifiable choice: capital distribution from these gains was reduced from S41.7 million in FY2024 to S27.8 million in FY2025, a S$13.9 million move to preserve capital and strengthen FLCT’s capacity for future growth.
Ultimately, the lower payout is not a sign of weakness but a calculated choice. It reflects a clear strategy to build a more sustainable DPU foundation that is less reliant on one-off gains and better positioned for long-term, stable growth.
2. A Tale of Two Portfolios: The Power of Logistics
Digging into FLCT’s operations reveals a story of two distinct portfolios with diverging performance. The Logistics & Industrial segment is demonstrating exceptional strength, while the Commercial segment faces a flat market.
| Metric | Logistics & Industrial Portfolio | Commercial Portfolio |
| Occupancy Rate | 99.7% | 86.1% |
| FY2025 Rental Reversion | +39.6% | 0.0% |
Data as of 30 September 2025. Rental reversion is based on the average rent vs. average rent basis.
The data clearly shows the resilience and high demand within the Logistics & Industrial (L&I) portfolio, which is operating at near-full capacity with a remarkable rental reversion of +39.6%. The stark contrast with the Commercial portfolio’s 0.0% rental reversion and lower occupancy underscores the wisdom of management’s strategic focus.
This strength was highlighted by the REIT Manager’s CEO:
“FY2025 presented a complex operating environment marked by geopolitical uncertainty, evolving trade environment, elevated interest rates and currency headwinds. Nevertheless, our core logistics and industrial portfolio demonstrated its quality through strong operational performance.”
— Ms. Anthea Lee, Chief Executive Officer of the REIT Manager
3. The Art of the Pivot: Pruning Weeds and Planting Seeds
FLCT’s management is executing a decisive capital recycling strategy, actively pruning underperforming assets to fund growth in its high-conviction logistics sector. This “pruning and planting” approach is reshaping the portfolio for greater resilience.
The “pruning” was the divestment of 357 Collins Street, a commercial property in Melbourne. This move allowed FLCT to strategically exit the “challenging Melbourne CBD office market,” freeing up capital and reducing exposure to a softer segment.
The “planting” was the acquisition of a prime logistics asset at 2 Tuas South Link 1 in Singapore. This modern, Green Mark Platinum certified facility is strategically located near the Tuas Mega Port, positioning FLCT to capture growing demand for high-quality logistics space in a key global trade hub.
The impact of these moves is clear and measurable. Over the course of the fiscal year, the proportion of L&I properties in FLCT’s portfolio increased from 71.9% to 75.1%, demonstrating a successful execution of its strategy to double down on its most resilient and profitable sector.
4. Why Rent is a Bargain: The Hidden Economics of Logistics
A counter-intuitive insight from FLCT’s report reveals the economic engine behind its logistics portfolio’s strong pricing power. For the tenants occupying these facilities, rent is a surprisingly small part of their overall budget.
The report highlights that facilities costs, which include rent, account for only 8-15% of a logistics occupier’s total expenses. This is dwarfed by transportation costs, which make up a massive 45-70% of their operational budget.
In simple terms, a tenant will gladly pay a premium for a prime, well-located warehouse if it saves them significant time and money on transportation. This dynamic gives FLCT’s modern, strategically located assets immense negotiating leverage. It is this economic reality that gives FLCT immense pricing power and enables the impressive +39.6% rental reversion seen in its L&I portfolio, connecting the quality of its assets directly to its financial outperformance.
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Conclusion: A Bet on Long-Term Strategy
FLCT’s latest results paint a picture of a management team making disciplined, forward-looking choices at the expense of maximizing short-term payouts. For investors assessing a volatile market, the crucial question becomes: is this deliberate focus on long-term resilience the smartest dividend one can receive?
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