Frasers Centrepoint Trust Review @ 2 November 2022

Basic Profile & Key Statistics

• Main Sector(s): Retail
• Country(s) with Assets: Singapore & Malaysia
  
• No. of Properties (exclude development/associate/fund): 10

Key Indicators

Performance Highlight

Gross revenue and NPI have improved yoy mainly due to the absence of rental rebates and an increase in rental income, however, distributable income has decreased yoy slightly. FCT has released $4.8 mil of taxable income which was retained in 1H2022 and retained $1.7 mil of current period tax-exempt income, net off $3.1 mil. Due to this, DPU has increased yoy marginally.

Rental Reversion

Retail portfolio rental reversion is at 1.5% based on the final year rent of the outgoing lease versus the first-year rent of the incoming lease. It would be 4.2% based on the average rent of the incoming lease versus the average rent of the outgoing lease. For Central Plaza, the rental reversion is at 2.4%.

Shopper Traffic & Tenant Sales

Tenant sales for the past 6 months is averagely 12% higher than the pre-COVID average while shopper traffic has recovered to an averagely of 79% of the pre-COVID average.

Acquisition

On 12 Sep, FCT announced the proposed acquisition of an additional 10% stake in Waterway Point, which would increase FCT interest from 40% to 50%. No completion was disclosed at this moment in time.

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: Below median for more than 20%
• Highest lease expiry within 5 years: Above median for more than 20%; Falls in FY24 
• Weighted average land lease expiry: ± 10% from median

Debt Profile

• Gearing ratio: Below median for more than 10%
• Cost of debt: Below median for more than 10%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: Below median for more than 20%
• WADM: Below median for more than 20%
• Highest debt maturity within 5 years: ± 10% from median; Falls in FY25
• Interest coverage ratio: Above median for more than 20%

Diversification Profile

• Top geographical contribution: Above median for more than 20%
• Top property contribution: Above median for more than 10%
• Top 5 properties' contribution: Above median for more than 20%
• Top tenant contribution: Below median for more than 20%
• Top 10 tenants' contribution: Below median for more than 20%

Key Financial Metrics

• Property yield: ± 10% from median
• Management fees over distribution: ± 10% from median; $6.37 distribution for every dollar paid 
• Distribution on capital: ± 10% from median
• Distribution margin: Above median for more than 10%

Trends

• Uptrend: NAV per Unit
• Slight Uptrend: Occupancy
• Flat: DPU
• Slight Downtrend: Distribution Margin
• Downtrend: Interest Coverage Ratio, Property Yield, Distribution on Capital

Relative Valuation

• Current 52 Weeks Range: 16.7%
• P/NAV: Below -2SD for 1y; Average for 3y; Below average for 5y
• Dividend Yield: Above +2SD for 1y; Above +1SD for 3y & 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Directors of REIT Manager's Shareholding
High REIT Manager's Shareholding	Short WALE
Low Gearing Ratio	Concentrated Lease Expiry
Low Cost of Debt	Low Unsecured Debt %
High Interest Coverage Ratio	Short WADM
Low Top Tenant & Top 10 Tenants Contributions	High Top Geographical Contribution
High Distribution Margin	High Top Property & Top 5 Properties Contributions
NAV per Unit Uptrend	Interest Coverage Ratio Downtrend
	Property Yield Downtrend
	Distribution on Capital Downtrend

As compared to the previous 1H performance, gross revenue has increased, however, both NPI and distributable income have declined mainly due to an increase in property expenses and finance costs. Moving forward, the acquisition of the additional 10% stake in Waterway Point should cushion some of the impacts of cost increase.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage due to the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.