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3 Slides That Investors Should Know From Frasers Commercial Trust’s Latest Results Presentation

Frasers Commercial Trust (SGX: ND8U), or FCOT, is a REIT that focuses primarily on commercial properties. It has stakes in six commercial properties located in Singapore and Australia. Its portfolio includes China Square Central, 55 Market Street and Alexandra Technopark in Singapore.

The REIT recently announced its first quarter results for the year ending September 2018 (1Q FY18). Here, I would like to share three slides from its result presentation.

A quick overview of some financial metrics

Source: FCOT Results Presentation

The above is a quick summary of the first quarter results of FCOT.

Overall, we can see that all metrics came in lower as compared to the same period last year.

The weaker results were driven by lower occupancy rates in a number of properties, planned vacancy for asset enhancement initiatives and the weaker Singapore dollar as compared to the Australian dollar.

Breakdown of net property income (NPI) 

Source: FCOT Result Presentation

Above is a quick summary of FCOT’s NPI for the quarter as compared to the same quarter last year.

What we can see from the above is that NPI was lower year-on-year across the board, with Alexandra Technopark, Central Park, and China Square Central down by 15%, 25%, 19% respectively, as compared to the same period a year ago.

The drop in NPI in Alexandra Technopark and China Square Central were due to asset enhancement initiatives. As for Central Park, the REIT recently secured a 12-year lease with Rio Tinto, which should improve the occupancy rate going forward.

FCOT’s lease expiry profile

Source: FCOT Result Presentation

What we can see from the above is that FCOT has about 43.7% of leases that will expire in the next two years, 17.6% in the following two years and the remaining after that. On a weighted average basis (by gross rental income), this is 3.6 years.

On one hand, FCOT will face significant pressure in renewing a huge proportion of its leases in the next two years, which might pose some short-term risks. On the other hand, it has close to 40% of leases that will not expire until FY2022, which should provide a visibility of income for a number of years.

As at 31 December 2017, FCOT had an actual occupancy of 80.3% and 86.6% in committed occupancy.

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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.