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Friday, April 30, 2021

Frasers Centrepoint Trust Analysis Review @ 30 April 2021

Basic Profile & Key Statistics

Frasers Centrepoint Trust (FCT) is a Retail REIT that invests mainly in Retail malls in Singapore. FCT  currently owns 11 properties in Singapore. 

Performance Highlight

Gross revenue, NPI and income available for distribution increase hugely due to the ARF acquisition. DPU increase by 28.4% YoY mainly due to the absence of distribution retention in 1H 2021. Including retention for1H 2020, the DPU would be around 6.35 cents. 

In 1H 2021, FCT divested Bedok Point and Anchorpoint on 9 November 2020 and 22 March 2021 respectively. Divestment of YewTee Point is expected to complete on 28 May 2021.
Tenant sales for Jan and Feb have improved as compared to pre-Covid time.

Overall rental reversion is at negative 0.7% with Changi City Point being the worst hit.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 40.69%
  • REIT manager's shareholding is high at 4.27%
  • Directors of REIT manager's shareholding is low at 0.07%

Lease Profile

  • Occupancy is slightly high at 96%
  • WALE is short at 1.53 years
  • Highest lease expiry within 5 years is high at 33.3% which falls in FY2022
  • Weighted average land lease expiry is slight long at 72.55 years

Debt Profile

  • Gearing ratio is slightly low at 35.2%
  • Cost of debt is low at 2.16%
  • Fixed rate debt % is low at 54%
  • Unsecured debt % is low at 39.4%
  • WADM is slightly short at 2.64 years
  • Highest debt maturity within 5 years is low at 25.8% which falls in FY2025
  • Interest coverage ratio is high at 5 times

Diversification Profile

  • Top geographical contribution is high at 99.8%
  • Top property contribution is high at 22.7%
  • Top 5 properties contribution is high at 76.2%
  • Top tenant contribution is low at 3.8% 
  • Top 10 tenants contribution is low at 19.6% 

Key Financial Metrics

  • Property yield is low at 4%
  • Management fees over distribution is high at 16.5% in which unitholders receive S$ 6.06 for every dollar paid 
  • Distribution on capital is slightly low at 3%
  • Distribution margin is high at 54.3%

Trends

  • Uptrend - NAV per Unit 
  • Downtrend - DPU, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 10.368 cents / average yield @ 5.03% = S$ 2.06
  • Price/NAV - NAV @ S$ 2.31 x average P/NAV @ 1.09 = S$ 2.52


Author's Opinion

 Favorable  Less Favorable
High Sponsor's ShareholdingLow Directors of REIT Manager's Shareholding
High Manager's ShareholdingShort WALE
Low Cost of DebtConcentrated Lease Expiry
Well Spread Debt MaturityLow Fixed Debt %
High Interest Coverage RatioLow Unsecured Debt %
Low Top Tenant & Top 10 Tenants ContributionsHigh Top Geographical Contribution
High Distribution MarginHigh Top Property & Top 5 Properties Contributions
NAV per Unit UptrendLow Property Yield
 Non-Competitive Management Fees
 DPU Downtrend
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

This is the first 5 months of result after the ARF acquisition, as such, there is no apple to apple comparison for the performance. After this acquisition, FCT has performed capital recycling by divesting 3 properties namely Bedok Point, Anchorpoint and YewTee Point, where the divestment of Yew Tee Point is expected to complete on 28 May 2021. With the gradual economic recovery and vaccination in Singapore, FCT performance is expected to be improved in the coming quarters.


For more information, you could refer to:

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 as a result of 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.

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