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2 Things That Investors Should Know About Frasers Commercial Trust Now

Frasers Commercial Trust (SGX: ND8U), or FCT, is a REIT that focuses primarily in commercial properties. It has ownership stakes in six commercial properties located in Singapore, Australia and United Kingdom.

There are two things about the REIT that investors may want to know about right now: its latest financial performance and valuation.

Financial performance

Here’s a table showing important items from FCT’s financial performance for the third quarter of financial year ending September 2018 (FY18).

Source: Frasers Commercial Trust’s Press Release

Above is a table from FCT latest quarterly earnings update. Overall, we can see that the REIT reported a mixed performance during the quarter.

The weaker revenue and net property income was due to lower occupancy rate for Alexandra Technopark, weaker Australian dollar and higher expenses at Caroline Chisholm Centre. On a bright note, distribution per unit remained unchanged year-on-year.

The REIT’s portfolio had a committed occupancy rate of 81.9% and gearing ratio of 35.4% at the end of the quarter. The low committed occupancy rate was due to asset enhancement initiative (AEI) at Alexandra Technopark (which should be completed in the second half of 2018 ) and AEI at China Square Central (expected to be completed in the second half of 2019).

Valuation

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 Commercial Trust’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 41 REITs that are in Singapore’s stock market.

Source: SGX StockFacts and Google Finance; data as of 3 August 2018

We can see that FCT is trading at a discount to the market average due to its low PB ratio and high 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.