When it comes to Frasers Logistics and Industrial Trust (FLT) IPO at SG$0.89, the narrative have been on the portfolio’s pricing of 2.7% or 2.8% above its net asset value. There is a prevailing idea that anything above its net asset value is expensive. My take is that, net asset value is only part of the valuation equation. And folks would have let the narrative of how much dividend yield we stand to earn dictate our investment decision. When price goes above NAV, it will be the book value that drives growth, and the narrative shifts to capital appreciation based on its book value. We will discuss this on another day.

FLT’s Cap Rate, Internal Rate of Return, WALE and Rental Escalation

Shifting the narrative to whether the underlying assets are vastly overvalue, we can take a look at the underlying property’s Market Cap Rate, which can be ......