Key Highlights From Frasers Commercial Trust’s Third Quarter Earnings

Last week, Frasers Commercial Trust (SGX: ND8U) announced its third quarter results for the year ending September 2018 (3Q FY18). As a quick introduction, Frasers Commercial Trust, or FCT, is a REIT that focuses primarily on commercial properties. It has ownership stakes in six commercial properties located in Singapore, Australia and United Kingdom.

Here, let’s look at ten things that investors should know about its latest results:

1. Quarterly gross revenue declined 1.6% year-on-year to S$32.5 million while net property income reduced by 9.2% year-on-year to S$20.4 million.

2. Distribution per unit (DPU) for the quarter was flat at 2.40 cents.

3. Based on FCT’s annualised DPU of 9.6 cents and its closing unit price of S$1.42 as of 31 July 2018, the REIT had a trailing distribution yield of 6.8%.

4. As of 30 June 2018, the REIT’s gearing stood at 35.4%.

5. The REIT’s portfolio had a committed occupancy rate of 81.9% at the end of the quarter. The committed occupancy rates for the Singapore, Australia and United Kingdom’s portfolio were 72.4%, 90.1% and 98.1% respectively.

6. As of 30 June 2018, the weighted average lease expiry (based on rental income) was 4.0 years. 52.5% of the REIT’s leases will expire between 2018 and 2021 whilst the rest will expire after 2022.

7. On 10 July 2018, FCT announced the divestment of 55 Market Street to an unrelated third party for S$216.8 million.

8. The asset enhancement initiative (AEI) at Alexandra Technopark is scheduled to be completed in the second half of 2018 while the AEI at China Square Central is set to completed in the second half of 2019.

9. FCT has right-of-first-refusal property pipeline of more than S$4 billion.

10. Jack Lam, chief executive of the REIT’s manager, commented on the divestment of 55 Market Street:

“55 Market Street is the smallest of our assets and is non-core. Monetizing the asset at a gain of close to S$67 million above valuation and almost tripling the initial purchase price unlocks significant value. It also creates opportunities for us to recycle capital to higher-yielding investments and other initiatives as we continue to reshape and strengthen the portfolio for long-term growth.”

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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.