Frasers Commercial Trust (SGX: ND8U), or FCT, is a REIT that focuses primarily on commercial properties. It has ownership stakes in six commercial properties located in Singapore, Australia, and the United Kingdom.
There are two things to know about the REIT right now: its latest financial performance and its valuation.
Here is a table showing a few important metrics from FCT’s financial performance for the first quarter of the financial year ending 30 September 2019 (FY19).
Source: FCT Result Presentation
Overall, we can see that FCT delivered a weaker performance for the quarter.
Gross revenue fell 10.7% year on year mainly due to lower occupancy rates for the Singapore properties, the divestment of 55 Market Street, and a weaker Australian dollar. One thing to note is that the above figures are before accounting for contributions from the 50.0% indirect interest in Farnborough Business Park (FPB), which is held as a joint venture and equity-accounted. Including the attributable net property income (NPI) of FBP, portfolio NPI for the quarter would be S$24.7 million, which is stable on a year-on-year basis.
As of 31 December 2018, FCT’s gearing and occupancy ratios stood at 28.4% and 83.8%, respectively.
There are two useful valuation metrics for assessing REITs: the price-to-book (P/B) ratio, and the distribution yield.
The table below shows FCT’s P/B ratio and distribution yield. It also shows the respective averages for those two valuation metrics for the 41 REITs that are in Singapore’s stock market.
Source: Stock Facts on SGX.com
FCT’s valuation looks to be at a discount to the market average due to its low P/B ratio.
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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.