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Rating Action

October 2, 2026, TRIS Rating upgrades the issuer rating on Prospect Logistics and Industrial Freehold and Leasehold Real Estate Investment Trust (PROSPECT or “trust”) to “BBB” from “BBB-”, with a “Stable” outlook. The upgrade reflects PROSPECT’s successful expansion of its business scale, while maintaining satisfactory operating performance and a stable financial profile.

The rating reflects the trust’s strong occupancy and stable cash flow from contract-based rental and service income. These strengths are partly offset by its relatively concentrated, albeit improving, asset portfolio, exposure to lease renewal risk from relatively short lease maturities, and moderate financial leverage.

Key Rating Considerations

Expanding revenue and earnings base

PROSPECT has significantly expanded its operating scale over the past several years through regular asset acquisitions from its sponsor, Prospect Development Co., Ltd. (PD) and Sansiri PLC (SIRI). These acquisitions have enlarged its asset base and substantially increased its revenue and earnings.

In 2025, PROSPECT acquired approximately THB4.4 billion of assets, adding 272,426 square meters (sq.m.) of leasable warehouse and factory space and nearly doubling total leasable area to 564,758 sq.m. from 292,332 sq.m. in 2024. Consequently, total operating revenue increased to THB877 million in 2025 from THB599 million in 2024 and THB400-THB550 million during 2021-2023. Total operating revenue continued to grow in the first half of 2026 (1H26) by 83% year-on-year (y-o-y) to THB590 million. Meanwhile, EBITDA rose to THB639 million in 2025, from THB300-THB450 million during 2021-2024 and further increased by 95% y-o-y to THB445 million in 1H26.

Following the completion of a THB5.04 billion asset acquisition on 25 September 2026, total assets are expected to reach approximately THB15 billion and leasable space to expand to 752,707 sq.m. We project operating revenue of around THB1.3 billion in 2026 and approximately THB1.5 billion annually in 2027-2028, supported by full-year contributions from the new assets. EBITDA is forecast to exceed THB1 billion per year from 2026 onwards, with EBITDA margins hovering around 75%. However, PROSPECT’s remaining lease term of about 18 years is shorter than those of higher-rated REIT peers, potentially weakening long-term earnings stability and asset value preservation and limiting rating headroom despite its larger scale.

Healthy occupancy supported by strong demand for strategically located assets

TRIS Rating expects PROSPECT’s average occupancy rate (OR) to remain healthy at above 90% over the next three years despite uncertainties related to geopolitical tensions and global trade policies. Our expectation is underpinned by the trust’s strategic locations and flexible property configurations, which are well positioned to capture demand for factory space driven by foreign direct investment (FDI) inflows, manufacturing relocation trends, and ongoing supply chain diversification.

PROSPECT’s properties are strategically located near Bangkok, seaports and airports. Approximately 55% of its industrial rental spaces are in designated free trade areas, enhancing demand from import- and export-oriented tenants, while the new supply of ready-built factories (RBF) in this area is limited. In addition, the properties have a high proportion of factory usage, which generally exhibits high renewal rates. These strengths have supported solid operating performance, with OR ranging in the 85%-98% range and tenant renewal rates of 77%-91% since 2020.

Despite a relatively short weighted average lease expiry (WALE) of 2.3 years, we view the trust’s lease renewal risk as manageable. As of June 2026, 77% of leases expiring in 1H26 had already been renewed. This reinforces our expectation that the renewal rate will remain around 80% over the next three years and continue to support occupancy levels over the forecast period.

Portfolio concentration risk remains

PROSPECT’s portfolio continues to be geographically concentrated despite its ongoing expansion. Most of the trust’s existing properties, comprising ready-built warehouses (RBW) and RBF, are located in the Bangkok Free Trade Zone (BFTZ) in Samut Prakan Province. The planned acquisition in 2026 will provide some geographic diversification through the addition of industrial properties in Bangpakong, Chachoengsao Province. Nevertheless, the portfolio will remain concentrated in only two locations. As a result, adverse local economic or industrial conditions could considerably affect the overall performance of the trust.

Tenant concentration remains relatively manageable, although exposure to key tenants persists. The trust’s top 10 tenants accounted for approximately 23% of total revenue in 1H26 and 25% of occupied area as of June 2026. While the tenant base is relatively diversified, the unexpected termination or downsizing of a major tenant could temporarily affect occupancy and rental income, particularly if replacement tenants cannot be secured promptly.

Moderate financial leverage

TRIS Rating expects PROSPECT’s financial leverage to remain moderate over the forecast period. PROSPECT has increasingly utilized debt financing to fund its acquisitions, causing its adjusted net debt to EBITDA ratio to rise to 5.9 times in 2025, from 3.4-3.6 times in 2023-2024 and 2.5-2.6 times in 2021-2022. The EBITDA interest coverage ratio also declined to 4.4 times in 2025, from 4.8 times in 2023 and 7.6-7.7 times in 2021-2022.

On 25 September 2026, PROSPECT completed the acquisition of assets valued at THB5.04 billion, funded by 60% new equity and 40% debt. The acquisition is expected to temporarily increase the trust’s financial leverage because the debt is recognized immediately, while the acquired assets will contribute only part of their annual earnings in the acquisition year. Leverage should therefore improve in the following year as the acquired assets contribute a full year of earnings. Thus, PROSPECT’s adjusted net debt to EBITDA ratio is forecast to stay at around 5.6 times in 2026 before improving to approximately 4.0-4.5 times in 2027-2028. The EBITDA interest coverage ratio is expected to remain within the 3.8-4.2 times range over the forecast period.

Adequate liquidity

We assess PROSPECT’s liquidity position as adequate over the next 12 months. As of June 2026, the trust’s liquidity sources comprised THB347 million cash on hand and short-term investments in money market funds and government bonds. We forecast funds from operations (FFO) over the next 12 months of around THB800 million. Its uses of funds over the next 12 months included debt repayment of THB170 million, and dividend payments equivalent to at least 90% of adjusted net investment income.

Financial covenants on PROSPECT’s bank loans require the trust to maintain the loan to value of total assets (LTV) ratio, excluding lease liabilities, below 60% and the reported interest-bearing debt to EBITDA ratio below 5 times. As of June 2026, these ratios were 38% and 4.3 times, respectively. We expect the trust to manage its finances prudently to remain in compliance with the covenants over the next 12 months.

Debt structure

As of June 2026, PROSPECT’s consolidated debt, excluding lease liabilities, amounted to THB3.8 billion. Its secured debt-to-total asset value ratio was 38%. As the ratio exceeds our 35% threshold, we assess that PROSPECT’s senior unsecured creditors could be disadvantaged relative to priority debt holders in terms of claims against the issuer’s assets.

For more information: Credit Rating