Frasers Centrepoint Trust Review @ 5 May 2023

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 higher rental income and higher atrium income. Distribution from joint ventures has improved YoY due to the acquisition of an additional 10% stake in Waterway Point and the acquisition of a 25.5% interest in NEX. Distribution from associates has improved YoY as well. However, due to an increase in finance costs, distributable income has declined YoY. Nonetheless, the distribution and DPU remain similar due to lower distribution retention (net of retention release),

Rental Reversion

Retail portfolio rental reversion is at 1.9% based on the final year rent of the outgoing lease versus the first-year rent of the incoming lease. It would be 4.3% 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 1% and 1.5% for income vs outgoing and average vs average respectively.

Shopper Traffic & Tenant Sales

Tenant sales for the past 6 months are average 14% higher than the pre-COVID average while shopper traffic has recovered to an average of 85% 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. Both acquisitions were completed in early February.

Asset Enhancement Initiative

AEI for Tampines 1 will commence in 2Q 2023 and target to complete in 3Q 2024.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median by 20% or more
• REIT Manager's Shareholding: Above median by 20% or more
• Directors of REIT Manager's Shareholding: Below median by 20% or more

Lease Profile

• Occupancy: ± 5% from median
• WALE: Below median by 20% or more
• Highest Lease Expiry within 5 Years: Above median by 20% or more; Falls in FY24
• Weighted Average Land Lease Expiry: ± 10% from median

Debt Profile

• Gearing Ratio: ± 10% from median
• Cost of Debt: ± 10% from median
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: Below median by 20% or more
• WADM: Below median by 20% or more
• Highest Debt Maturity within 5 Years: Below median by 10% or more; Falls in FY26
• Interest Coverage Ratio: Above median by 20% or more

Diversification Profile

• Top Geographical Contribution: Above median by 20% or more
• Top Property Contribution: Above median by 10% or more
• Top 5 Properties' Contribution: Above median by 20% or more
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: ± 10% from median
• Management Fees over Operating Distributable Income: ± 10% from median; $5.92 distribution for every dollar paid 
• Operating Distributable Income on Capital: ± 10% from median
• Operating Distributable Income Margin: Above median by 10% or more
• Operating Distribution Proportion: Above median by 5% or more

DPU Breakdown

• TTM DPU Breakdown
• 95.9% from Operation
• 3.2% from Management Fees Paid in Units
• 0.9% from Release of Retention

Trends

• Uptrend: DPU from Operation, NAV per Unit
• Slight Uptrend: Occupancy
• Flat: Operating Distributable Income Margin
• Slight Downtrend: Property Yield
• Downtrend: Interest Coverage Ratio, Operating Distributable Income on Capital 

Relative Valuation

• P/NAV: Average for 1y; Below -1SD for 3y & 5y
• Dividend Yield: Average for 1y, 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
High Committed Occupancy	Concentrated Lease Expiry
Well Spread Debt Maturity	Low Unsecured Debt %
High Interest Coverage Ratio	Short WADM
Low Top Tenant & Top 10 Tenants' Contributions	High Top Geographical Contribution
High Operating Distributable Income Margin	High Top Property & Top 5 Properties' Contributions
High Operating Distribution Proportion	Interest Coverage Ratio Downtrend
DPU from Operation Uptrend	Operating Distributable Income on Capital Downtrend
NAV per Unit Uptrend

Overall, the performance has improved as compared to the previous half-year. However, there is 17.7% of debt to be refinanced within the next 6 months' time, which would likely result in an increased cost of debt. On the positive side, with the full 6 months' contributions from an additional 10% stake in Waterway Point & 25.5% stake in NEX, the performance is expected to be improved.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.