Frasers Centrepoint Trust (SGX: J69U), or FCT, is a retail REIT with a portfolio comprising suburban retail malls in Singapore such as Causeway Point, Northpoint City North Wing (including Yishun 10 Retail Podium), and Anchorpoint. The REIT also holds a 31.15% stake in Hektar Real Estate Investment Trust (5121.KL), a retail REIT in Malaysia.
There are two things to know about Frasers Centrepoint Trust right now: its latest financial performance and valuation.
Here is a summary showing Frasers Centrepoint Trust’s financial performance for the second quarter of financial year ending 30 September 2018 (FY18).
Source: Frasers Centrepoint Trust Results Presentation
Gross revenue for the quarter was up 6.3% year-on-year to S$48.6 million while net property income rose 6.9% to S$34.8, million mainly due to a 31.7% year-on-year revenue increase from Northpoint City North Wing (including contribution from Yishun 10 retail podium). The mall’s occupancy improved significantly after the completion of asset enhancement initiative works.
As at 31 March 2018, the retail REIT clocked in a gearing ratio of 29.2% while its occupancy rate stood at 94%.
In all, Frasers Centrepoint Trust had a good quarter with all metrics performing ahead of the same period last year.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows Frasers Centrepoint Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 42 REITs and stapled trusts that are listed on the Singapore stock market.
Source: SGX StockFacts; data as of 6 July 2018
We can see that Frasers Centrepoint Trust’s valuation is at a premium to the market average, both in terms of PB and distribution yield.
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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. Motley Fool has a recommendation for Frasers Centrepoint Trust.