9 Quick Things for Investors to Learn from Frasers Centrepoint Trust’s AGM

From time to time, Foolish hats turn up at annual general meetings (AGM).

As a unitholder of Frasers Centrepoint Trust (SGX: J69U), I had the opportunity to attend the real estate investment trust’s AGM today. Prior to this, I had also taken some notes from the REIT’s latest annual report which you can check out here.

Without further ado, here are nine quick bites of information I had picked up from Frasers Centrepoint Trust’s AGM:

  1. Dr. Chew Tuan Chiong, Chief Executive Officer of the REIT’s manager, gave a brief overview for the fiscal year ended 31 September 2015 (FY2015). Among his highlights was the low debt gearing that Frasers Centrepoint Trust had at the end of FY2015. This comes despite the asset enhancement initiatives (AEI) the REIT has undertaken and the 100% payout ratio that the REIT has maintained over the years.
  2. Dr. Chew also highlighted that the REIT sector, measured by the FTSE REIT Index, had recorded a negative total return of 1.8% for FY2015. While the figure was negative, REITs in general were better off than the Straits Times Index’s (SGX: ^STI) return of negative 18%. In contrast to both indices, Frasers Centrepoint Trust held up with a 7% positive return. In a light hearted moment, he congratulated everyone in attendance for picking the right REIT.
  3. There could be more to look forward to for Frasers Centrepoint Trust. There will be two new office towers built opposite Causeway Point. The Woodlands MRT station, where the mall is located, is also set to be an interchange for the upcoming Thomson MRT Line. Meanwhile, Northpoint is also getting a facelift and will be integrated to form a larger Northpoint City. Elsewhere, the Expo MRT station is expected to be an interchange station for the Downtown MRT Line as well. The station’s adjoining Changi Point could benefit as a result. The trio of malls mentioned above make up a significant portion of Frasers Centrepoint’s top-line and bottom-line.
  4. There was a concern raised on the rise of eCommerce, where malls may face the prospect for becoming showrooms for online websites. Dr. Chew said that studies show that online shopping makes up around 5% of Singapore’s retail pie. Malls could add more services like food and beverage to counter the online buying trend. On the other hand, there were also benefits from the online shopping trend. He cited the example where click-and-collect of groceries could reduce the browsing time needed at the grocer and therefore, lead to more time for shoppers to browse the rest of the mall.
  5. Despite the steady results for FY2015, there were some tough questions on segments of the REIT which had a relatively poor performance. The low occupancy and underperformance of Bedok Point was one of the sticking points. Chairman Philip Eng was in absolute agreement that Bedok Point has not done as well. Dr. Chew added some insight, saying that the third and fourth level of the mall was not doing as well as the rest of the floors. The management team is working hard to reposition the mall as a destination mall. The nearby Bedok Mall (which to be clear, is not owned by Frasers Centrepoint Trust) is significantly larger, which makes the job harder. When asked whether a sale of Bedok Point was possible, Eng said that it is an option.
  6. Another sticking point was the fall in Hektar REIT’s contribution. As a reminder, Frasers Centrepoint Trust has a 31% stake in the Malaysia-based Hektar REIT. Dr. Chew responded by saying that the fall was mainly due to the depreciation of the Malaysian ringgit against the Singapore dollar.
  7. The management team was also asked about the lower occupancy rate at Changi Point which stood at 91% at the end of FY2015. Dr. Chew responded that the lower occupancy was a transitional issue. He still expects volatility ahead for the occupancy rates, but sees positive trends for the mall.
  8. The discussion on Hektar REIT also segued into talk about overseas expansion. One unitholder aptly noted that expanding overseas would bring a new risk profile into the REIT. Dr. Chew responded by saying that safety does not come from the location of assets alone. In his opinion, safety also arises from the philosophy of the board and management team. He added that the REIT will remain Singapore focused.
  9. Eng added that no more than 20% of assets will be overseas, if the REIT decides to venture outside the shores of Singapore. The REIT has had its eyes on Malaysia, in part due to Hektar REIT, and is also looking to leverage the local knowledge of its sponsor, Frasers Centrepoint Ltd (SGX: TQ5), for overseas expansion. Australia is an area of interest.

There were more questions during the AGM, but these are a few of the key ones which I was able to take note of. I hope you’ve found them helpful. Fool on!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns units in Frasers Centrepoint Trust.