Frasers Commercial Trust’s Latest Earnings: Distributions Up 1.1% as the REIT Celebrates 10 Years of Listing

Earlier this morning, Frasers Commercial Trust  (SGX: ND8U) released its full year and fourth-quarter earnings report for its fiscal year ended 30 September 2016 (FY16). The real estate investment trust (REIT) has ownership stakes in six commercial properties located in Singapore and Australia. Its portfolio includes China Square Central and Alexandra Technopark.

You can catch up with the results from Frasers Commercial Trust’s previous quarter here.

Financial highlights

The following’s a quick rundown on some of the REIT’s latest financial figures:

  1. Gross revenue rose to S$39.3 million in the reporting quarter, up 5.7% from the same quarter a year ago. For the full fiscal year, Frasers Commercial Trust’s gross revenue was up 10% to S$156.5 million.
  2. Net property income (NPI) also rose by 7% year-on-year to $29.3 million for the quarter. For FY16, NPI was $115.6 million, or a 13% improvement from the previous fiscal year.
  3. Distribution per unit (DPU) for the fourth quarter of FY16 was 2.45 cents, down 2.8% year-on-year. For FY16, DPU was 9.82 cents, or a mere 1.1% improvement from FY15.
  4. Frasers Commercial Trust’s property portfolio was valued at S$1.99 billion, as of 30 September 2016. The REIT reported an adjusted net asset value per unit of S$1.52, down slightly from the S$1.53 seen a year ago.

Beyond these, Foolish investors might want to keep an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded, and its sensitivity to the interest rate environment. These are summarized for Frasers Commercial Trust below:

Source: Frasers Commercial Trust’s earnings presentations

Frasers Commercial Trust’s debt profile is relatively unchanged compared to a year ago.

To be sure, the REIT also managed to widen its hedged borrowings to 85%. As of 30 September 2016, the REIT’s weighted average debt to maturity was 2.6 years. The REIT also reported that it has no debt coming due up till September 2017.

Frasers Commercial Trust also had a maiden issuance of a $100 million five year senior unsecured note at a fixed rate of 2.835%.

Operational highlights and a future outlook

The REIT’s overall portfolio occupancy stood at 93.0%, as of 30 September 2016. A year ago, the selfsame figure was 95.4%. The weighted average lease expiry (gross rental) was 3.0 years. Low Chee Wah, the REIT manager’s chief executive, summed up the quarter with a few words:

“We are pleased that the Trust continues to achieve new highs, and this is particularly commendable given the weaker global economy and challenging Singapore office leasing environment.

The distributable income of S$77.6 million and DPU of 9.82 cents also marked the seventh consecutive year of growth since the completion of the recapitalisation exercise in 2009.

The full year contribution from 357 Collins Street and good performance of Alexandra Technopark continued to boost the performance of the Trust. The Singapore properties and 357 Collins Street continued to enjoy positive rental reversions during the quarter, while the 3.0% annual fixed step-up rents at Caroline Chisholm Centre continued to provide organic growth for the Trust.”

Frasers Commercial Trust is also celebrating the 10th anniversary of its listing. For its outlook, Low added the following statements:

“With the weaker global economic environment and Singapore office market outlook, we will continue to adopt proactive asset management and leasing initiatives. In view of the weaker environment, we will also review opportunities for asset enhancements to reposition the properties to stay competitive.

We are pleased that FCOT [Frasers Commercial Trust] ended a decade of listing on a high note by delivering the highest distributable income to Unitholders and DPU in FY16. We look forward to delivering a stable growth to Unitholders as we take the Trust forward to the next decade.”

Frasers Commercial Trust’s units closed at a price of $1.40 each yesterday. This translates to a historical price-to-book ratio of 0.92 and a trailing distribution yield of around 7%.

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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 doesn’t own shares in any companies mentioned.