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3 Things Investors Should Know About Frasers Centrepoint Trust’s Business Now

Credit: Lali Masriera

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 PointNorthpoint City North WingAnchorpointYewTee PointBedok 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.

Here are three things about Frasers Centrepoint Trust’s business that investors may want to take note of right now:

1. Long leases for its properties

Here’s a summary of Frasers Centrepoint Trust’s property portfolio, and the land-leases for each property:


Source: Frasers Centrepoint Trust earnings presentation

What’s uesful to note here is that most of the REIT’s properties have long-term land leases that have over 70 years to expiry. Only Bedok Point and Changi City Point have land leases that are shorter than 60 years.

In other words, most investors in Frasers Centrepoint Trust need not worry that the REIT’s land leases will expire within their lifetime.

2. A history of positive rental reversions

The following is a chart showing the average rental reversions that Frasers Centrepoint Trust has experienced going back to its FY2007 (fiscal year ended 30 September 2007):


Source: Frasers Centrepoint Trust earnings presentation

For investors in a REIT, the ideal scenario would be for it to grow its rent over time. This can be seen from the rental reversion numbers – are they positive or negative? A positive rental reversion is a sign that a REIT is able to increase its rent.

In the case of Frasers Centrepoint Trust, its rental reversion rate has been positive throughout the last 10 years. But, the rental reversion rate in FY2017 is the lowest it has been over the period under study. Investors may want to look deeper and figure out if better rental reversions can be achieved in the years ahead.

3. History of growth

From the chart below, you can see that Frasers Centrepoint Trust has consistently grown its distribution per unit (DPU) since its IPO in FY2006:


Source: Frasers Centrepoint Trust earnings presentation

The rate of growth in the REIT’s DPU has also been a respectable 6.4% from FY2006 to FY0217.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.