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How Did Frasers Centrepoint Trust Fare Last Quarter?

With an enviable 11-year history of distributions per unit (DPU) growth, Frasers Centrepoint Trust (SGX:J69U) has certainly been one of the standout REITs in Singapore. Recently, the REIT released its results for the second quarter of its financial year (FY17/18 ends on 30 September 2018). Let’s see if it has maintained its impressive track record of growth.

  1. The trust recorded a 6.3% year-on-year increase in gross revenue to S$48.6 million for the quarter ending on 31 March 2018. Net property income (NPI) grew 6.9% to S$34.8 million. Consequently, DPU increased 2.0% to 3.1 cents from 3.04 cents last year

2. For the 6-month period from 1 October 2017 to 31 March 2018, gross revenue increased 7.5% to S$96.5 million. NPI rose 6.3% to S$69.3 million and DPU rose 2.9% to 6.1 Singapore cents.

3. The increase in revenue and NPI was driven by higher rental revenue and improved occupancy at Northpoint City North Wing since its asset enhancement initiative last year.

4. As of 31 March 2018, the REIT had a relatively low gearing ratio of 29.2%, well below the regulatory cap of 45%. Interest cover stood at a comfortable 6.64 times, while average cost of borrowing was 2.4%.

5. Frasers Centrepoint Trust had assets totaling S$2.76 billion and S$886 million in liabilities. Net assets, therefore stood at S$1.88 billion. Net asset value per (NAV) unit was $2.03, a slight improvement fromS$2.02 on 30 September 2017.

6. At the end of this quarter, the total portfolio occupancy rose to 94.0%, from 92.6% the previous quarter. This was largely due to the increased occupancy in Northpoint City North Wing. Another positive for the REIT is that average rental reversion for the quarter was positive 9.1%. Overall, rental reversions for the 6-month period were positive 3.9%.

7. Weighted average lease expiry (WALE), a measure of the average remaining length of tenant contract, was 2.1 years by net lettable area and 1.82 years by gross rent. Around 11.8% of leases (by gross rent) are due in the next 6 months.

8. Over the quarter, portfolio shopper traffic excluding Northpoint City North Wing (which is stabilising since the opening of the south wing in December 2017) inched up 0.5%. This was largely driven by 3% increase in shopper traffic at Causeway Point and Changi City point. However, tenant sales — excluding Northpoint City North Wing — declined 1.2% year-on-year.

9. On the outlook for the rest of the year, the REIT’s management said that with retail sales up, suburban malls are forecasted to see relatively stable performance this year.

10. At the time of writing, units of Frasers Centrepoint Trust exchanged hands at S$2.23. This translates to a price-to-book ratio of 1.098 and an annualised distribution yield of 5.47%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation on Frasers Centrepoint Trust. Motley Fool Singapore contributor Jeremy Chia dos not own any units in companies mentioned.