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Sunday, November 07, 2021

Frasers Centrepoint Trust Analysis Review @ 7 November 2021

Basic Profile & Key Statistics

Frasers Centrepoint Trust (FCT) invests mainly in Retail malls in Singapore and currently owns 10 properties in Singapore.

Performance Highlight

Performance has improved YoY mainly due to ARF acquisition. 

Retail portfolio rental reversion is at -0.6% based on final year rent of outgoing lease versus first-year rent of incoming lease. It would be +2.1% based on the average rent of incoming lease versus average rent of the outgoing lease.

As compared to pre-COVID, despite the traffic at only 50-60%, tenant sales have recovered to more than 90%. 

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 41.026%
  • REIT manager's shareholding is high at 4.316%
  • Directors of REIT manager's shareholding is low at 0.074%

Lease Profile

  • Occupancy is slightly high at 97.3%
  • WALE is short at 1.64 years
  • Highest lease expiry within 5 years is high at 35.6% which falls in FY2022
  • Weighted average land lease expiry is slight long at 72.05 years

Debt Profile

  • Gearing ratio is low at 33.3%
  • Cost of debt is slightly low at 2.2%
  • Fixed rate debt % is low at 56%
  • Unsecured debt % is low at 47.4%
  • WADM is short at 2.47 years
  • Highest debt maturity within 5 years is low at 28.2% which falls in FY2024
  • Interest coverage ratio is high at 5.1 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 77.4%
  • Top tenant contribution is low at 3.6% 
  • Top 10 tenants contribution is low at 19.7% 

Key Financial Metrics

  • Property yield is slightly low at 4.6%
  • Management fees over distribution is high at 15.8% in which unitholders receive S$ 6.33 for every dollar paid 
  • Distribution on capital is slightly low at 3.5%
  • Distribution margin is high at 56.2%

Trends

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

Relative Valuation

  • P/NAV - Below average for 1y, 3y and 5y
  • Dividend Yield - Above +1SD for 1y; Above average for 3y; Average for 5y

Author's Opinion

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

FCT FY DPU managed to hit 12.085 cents, which is slightly higher than the pre-covid level of 12.07 cents at FY20 and 12.015 cents at FY19. Moving forward, the gradual recovery of economic activities and the possible easing of restriction should help to improve FCT performance further.


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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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