Frasers Centrepoint Trust reports 1HFY2024 DPU of 6.022 cents, 1.8% lower y-o-y

Felicia Tan
3-min read

Gross revenue for the six-month period fell by 7.2% y-o-y to $172.2 million.

The manager of Frasers Centrepoint Trust J69u (FCT) has reported a distribution per unit (DPU) of 6.022 cents for the 1HFY2024 ended March 31 ,1.8% lower y-o-y.

Gross revenue for the six-month period fell by 7.2% y-o-y to $172.2 million mainly due to the divestment of Changi City Point and Tampines 1, which is undergoing an asset enhancement initiative (AEI).

Excluding Changi City Point and Tampines 1, gross revenue would have been up by 2.9% y-o-y at $153.2 million due to higher physical occupancy, passing rents and staggered rental across most malls.

Property expenses for the 1HFY2024 fell by 4.1% y-o-y to $47.6 million mainly due to the divestment of Changi City Point. Excluding the divestment and the AEI at Tampines 1, NPI rose by 2.1% y-o-y at $112.1 million

Net property income (NPI) fell by 8.4% y-o-y to $124.6 million.

Distributions to unitholders rose slightly by 0.2% y-o-y to $104.9 million. The amount includes the advanced distribution of 4.25 cents for Oct 1, 2023 to Feb 4, 2024. The advanced distribution was already paid to unitholders on April 2.

As at March 31, FCT’s committed occupancy stood unchanged q-o-q at 99.9%. Its rental reversion for the 1HFY2024 came in at 7.5%; shopper traffic for the 2QFY2024 improved by 8.1% y-o-y while tenants’ sales for the quarter also improved by 4.3% y-o-y.

As at the same period, FCT’s aggregate leverage stood at 38.5%. Its interest coverage ratio (ICR) stood at 3.26 times.

“FCT achieved a healthy set of results for 1HFY2024 on robust operating performance. The Singapore suburban retail market remained resilient. Our portfolio achieved good leasing traction that underpinned better rental reversions and near-full occupancy across all our malls. Tenants’ sales and shopper traffic growth were also encouraging with some larger malls registering stronger traffic compared to pre-Covid levels,” says Richard Ng, CEO of the manager.

On the acquisition of the additional stake in Nex, Ng reveals that the manager is executing its growth plans at the suburban mall through AEIs, tenant remix strategy and rental improvements.

The manager is also concurrently reviewing AEI plans for other malls in its portfolio and will announce them in due course. The AEI at Tampines 1 is on schedule to complete this September and thereafter contribute to its full capacity, he adds.

“We remain positive on the outlook of the suburban retail sector in Singapore, and we believe FCT will continue to deliver stable and resilient performance going forward,” he continues.

Looking ahead, the REIT manager expects interest rate movements and rising operating expenses to remain the key factors that are affecting the REIT’s performance.

“Barring unforeseen circumstances, the manager expects the average cost of borrowing for FCT to be around the low-4% level for FY2024. The manager will continue to work on various initiatives to drive the optimisation of operating costs and adopt appropriate hedging strategies for energy contracts to mitigate the impact to its utilities expenses,” reads its April 25 statement.

“FCT’s portfolio of high-quality suburban retail properties has strong competitive advantages due to the malls’ proximity to populous residential estates, healthy shopper traffic and excellent connections to public transportation network. FCT is well-positioned to ride on rising trends such as hybrid work arrangement and the shift to omnichannel retailing. These attributes and the focus on essential trades and services underpin the resilience of FCT’s performance,” it adds.

Units in FCT closed at $2.18 on April 25.

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