Frasers Centrepoint Trust (SGX: J69U), or FCT, is a real estate investment trust (REIT) with a portfolio comprising of the following suburban retail properties in Singapore: Causeway Point, Northpoint City North Wing (including Yishun 10 Retail Podium), Anchorpoint, YewTee Point, Bedok Point, Changi City Point, and Waterway Point (one-third interest). It also holds a 31.15% stake in Hektar Real Estate Investment Trust (KLSE: 5121), a retail-focused REIT in Malaysia.
There are two things to know about the REIT right now: its latest financial performance and valuation.
Here is a table showing important items from FCT’s financial performance for the third quarter of financial year ending 30 September 2019 (FY19).
Source: FCT Result Presentation
Overall, we can see that FCT delivered a mixed quarter.
Gross revenue was up by 1.6% year-on-year to S$49.1 million as portfolio occupancy improved to 96.8% as of 30 June 2019, compared to 94.0% a year ago. Yet, net property income came in lower due to higher property expenses arising from the absence of a property tax refund. Distribution per unit (DPU) is lower year-on-year due mainly to an enlarged unit base from private placement in May and preferential offering in June.
As of 30 June 2019, FCT’s gearing and occupancy ratios stood at 23.5% and 96.8%, respectively.
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 FCT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 42 REITs that are in Singapore’s stock market.
Source: Yahoo Finance, OCBC Weekly S-REITs Tracker
We can see that FCT’s valuation is at a premium to the market average, both in term of PB ratio 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. The Motley Fool Singapore has recommended the stocks of Frasers Centrepoint Trust and Hektar Real Estate Investment Trust.
Motley Fool Singapore 2019