3 Things Investors Should Know From Frasers Centrepoint Trust’s Latest Earnings

Frasers Centrepoint Trust (SGX: J69U) is a real estate investment trust with a focus on retail properties. Its property portfolio currently comprises six suburban malls in Singapore: Causeway Point, Northpoint City North Wing, Anchorpoint, YewTee Point, Bedok Point, and Changi City Point. It also holds a 31.15% stake in Hektar Real Estate Investment Trust (KLSE: 5121.KL), a retail-focused REIT in Malaysia.

In late October, Frasers Centrepoint Trust reported its fourth quarter earnings for its fiscal year ended 30 September 2017 (FY2017). Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows the results of Frasers Centrepoint Trust for the reporting quarter:

Source: Frasers Centrepoint Trust FY2017 fourth quarter earnings presentation

The REIT had a good quarter, with revenue, net property income, income available for distribution, and distribution per unit all showing healthy growth.

Frasers Centrepoint Trust attributed its growth in the reporting quarter to higher rental contributions from Causeway Point, Northpoint City North Wing, Changi City Point, and additional revenue from the retail podium at Yishun 10, which is part of Northpoint City North Wing.

2. The occupancy rate

The occupancy rate for a REIT is an important metric to look at since it gauges the strength of the market demand for the REIT’s properties. The following chart shows the occupancy rate for Frasers Centrepoint Trust across its different properties going back to the fourth quarter of FY2016:

Source: Frasers Centrepoint Trust FY2017 fourth quarter earnings presentation

The REIT has managed to increase its occupancy rate sequentially, as well as year-on-year. That’s a positive development.

3. Lease expiry profile

A REIT’s lease expiry profile is useful to study because it gives us insight on the stability of the REIT’s rental income. The data below shows Frasers Centrepoint Trust’s latest lease expiry profile:

Source: Frasers Centrepoint Trust FY2017 fourth quarter earnings presentation

What’s important to note here is that the weighted average lease to expiry for Frasers Centrepoint Trust was a short 1.73 years. Furthermore, with about 92% of the REIT’s leases expiring by 2020, investors may see some volatility in the REIT’s occupancy rates in the near future.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.