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Monday, May 16, 2022

Frasers Centrepoint Trust Analysis Review @ 16 May 2022

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

Performance Highlight

Gross revenue, NPI, distribution to unitholders and DPU increased yoy due to full contribution from the ARF acquisition.

Rental Reversion
Retail portfolio rental reversion is at 1.73% based on final year rent of outgoing lease versus first-year rent of incoming lease. It would be 4.12% 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 6.36%.

Shopper Traffic & Tenant Sales
Tenant sales have improved to above pre-COVID level despite tenant sales recovering to only 50%-70% between Oct 2021 to Mar 2022.

Asset Enhancement Initiative
FCT targets to complete the first phase of EV charging points installation work for its malls by Sep 2022. 

Asset Enhancement Initiative
Century Square and Tampines 1 would be part of the Tampines DDC (Distributed District Cooling) network, which is expected to be operational by 2025.

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 (from 1Q 22 Business Update)
  • Weighted average land lease expiry: ± 10% from median

Debt Profile

  • Gearing ratio: Below median for more than 20%
  • Cost of debt: ± 10% from median
  • 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 FY24
  • 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; $6.45 distribution for every dollar paid 
  • Distribution on capital: ± 10% from median
  • Distribution margin: Above median for more than 20%

Trends

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

Relative Valuation

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

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
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
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

The 1H FY22 performance has improved as compared to the half year performance and the tenant sales has recover to pre-COVID level. With the easing of COVID-19 restrictions and border re-opening in April, FCT performance is expected to improve moving forward.


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.

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