9 Quick Things Investors Should Know About Frasers Commercial Trust’s Latest Earnings

Last week, Frasers Commercial Trust (SGX: ND8U) released its first quarter results for its fiscal year ending 30 September 2018 (FY2018). As a quick introduction, Frasers Commercial Trust is a REIT that focuses primarily on commercial properties. At the end of 2017, its portfolio comprised six commercial properties located in Singapore and Australia.

Here are nine things investors should know about Frasers Commercial Trust’s latest results:

1. Gross revenue for the reporting quarter declined by 11.0% year-on-year to S$35.32 million, while net property income fell 14.9% to S$24.86 million.

2. The lower top-line affected the bottom-line, as the REIT’s distribution per unit (DPU) slipped by 4.4% to 2.40 cents.

3. Based on Frasers Commercial Trust’s annualised DPU of 9.60 cents (from the aforementioned quarterly DPU of 2.40 cents), and its closing unit price of S$1.46 on 31 January 2018, the REIT has an annualised forward distribution yield of 6.6%.

4. As of 31 December 2017, the REIT’s gearing stood at 34.8%, which is a safe distance from the regulatory gearing ceiling of 45%.

5. The REIT’s portfolio had a committed occupancy rate of 86.6% as of 31 December 2017.

6. The weighted average lease expiry profile for Frasers Commercial Trust at end-2017 was 3.6 years by GRI (gross rental income). 43.7% of the REIT’s leases are expiring in the next two years, with 17.6% to expire in the following two years. The remaining 38.7% of the REIT’s leases will expire only after FY2022.

7. One of the REIT’s properties, Alexandra Technopark, is currently undergoing a S$45.0 million asset enhancement initiative (AEI). The project, which was announced on 23 January 2017, is expected to be completed by mid-2018. At China Square Central, regulators have given the greenlight for a S$38 million asset enhancement initiative to rejuvenate and reposition the retail podium at 18 Cross Street.

8. Frasers Commercial Trust now has right of first refusal (ROFR) on assets with a total value of over S$4 billion. This is around twice the REIT’s current asset base.

9. In December 2017, Frasers Commercial Trust expanded its investment mandate to include Europe-based properties. In the same month, the REIT entered into a 50:50 joint venture with Frasers Property Ltd  (SGX: TQ5) to acquire Farnborough Business Park in the UK at a value of £175 million (around S$320 million). The acquisition target is a 46.5 hectare freehold business park comprising 14 commercial buildings with a total net lettable area of approximately 555,000 square feet. It is located west of London.

We believe we’ve identified a REIT dividend dynamo whose financials are strong enough to qualify its dividend as “safe” – and have profiled this stock in a research report that’s now available to download completely free of charge. Simply click here to claim your copy today!

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.