On 25 October 2024, Frasers Centrepoint Trust (“FCT”) have announced their full year result for FY2024. There are no significant changes to be reported this quarter, with the metrics remaining relatively unchanged and healthy as compared to the previous quarter. DPU did see a decrease by 0.9% compared to the previous financial year, given the larger number of units with the private placement done in FY2024. Something investors should take note of as we move into FY2025 to determine if it will be accretive or not.
On a separate note, the Tampines 1 AEI was also completed on schedule in August 2024. With a 100% committed mall occupancy and a fresh look, looking forward for it to fully contribute back to our distributions in the new financial year.
Website: Financial Statements And Related Announcement::Full Yearly Results
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -0.9% | No Info |
DPU decreased by 0.9% to SGD0.1204 per share for FY2024 from SGGD0.1215 per share in the previous financial year. Do note that the decrease was mainly due to the private placement done in the current financial year, as distributions to unitholders saw an increase by 3.2%. The metric is Unfavorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 99.7% | 99.7% |
Occupancy rate as of 30 September 2024 remained unchanged at 99.7%. This metric remains Favorable as it is above my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 38.5% | 39.1% |
The gearing ratio as of 30 September 2024 decreased to 38.5%. The decrease was due to net repayment of borrowings this quarter. The metric remains Neutral.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.4x | 3.2x |
The adjusted interest coverage for the trailing 12 months increased to 3.4 times as of 30 September 2024. The metric remains Favorable as it is above my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 2.5 years | 2.8 years |
Weighted average term to maturity of their debt shortened further to 2.5 years as of 30 September 2024. The metric remains Favorable as of now given that there is still sufficient time to refinance their debts as they fall due. Do note that approximately 37.7% of their debt will mature in the next 2 years.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.98 | 0.98 |
The Price to Book (“P/B”) ratio currently remains unchanged at 0.98. This is computed using the closing share price of SGD2.25 on 25 October 2024 and the net asset value per share of SGD2.29 as of 30 September 2024. The P/B ratio is Favorable given the slight discount to book value.
As of 25 October 2024, the Market Capitalization is approximately SGD4,113 million.
Other Metrics
Tenant profile
FCT has a well-diversified tenant profile with the top 10 customers as of 30 September 2024 account for about 19.3% of monthly portfolio gross rental income. Furthermore, no single tenant accounts for more than 5.6% of FCT’s gross rental income. This is Favorable as FCT will not be too reliant on any single tenant for income.
Heartland Living
The Singapore government intend for every town to have a shopping mall available and successful. Such that they are willing to have measures to help support heartland businesses financially. This means that as an investor of retail properties, you can be assured that there will almost always be tenants for your shopping malls, which translates to rental income. It may still be subjected to capital depreciation and appreciation when exposed to economic conditions, such as the current high interest rates. However as of now, your interests are in line with the government.
Website: The Bull Case For Investing In Singapore Retail Property
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 5.35% | SGD 0.120 |
| 2023 | 5.40% | SGD 0.122 |
| 2022 | 5.43% | SGD 0.122 |
| 2021 | 5.31% | SGD 0.092 |
| 2020 | 4.08% | SGD 0.122 |
| 2019 | 6.20% | SGD 0.140 |
With the final dividend payout declared, the total payout for the calendar year 2024 amounted to SGD0.120 per share as expected. With a closing share price of SGD2.25 on 25 October 2024, this translates to a dividend yield of 5.35%. For my benchmark, a general reasonable range would be around 5.00%. The dividend yield is thus Favorable.
Website: Reasonable Dividend Yield 2024Q4 – 5.00%
Investors will need to be mentally prepared that the share price may fall further should the interest rates and yield of safe assets increase. If the required dividend yield increases to 6.00% as a benchmark, based on the dividend of SGD0.120 per share there is potential for FCT to see its share price drop by another 11.1% to SGD2.00.
| Yield | Share Price | Downside |
|---|---|---|
| Current (5.00%) | 2.25 | – |
| 6.00% | 2.00 | -11.1% |
| 7.00% | 1.71 | -23.8% |
Interest Rate Sensitivity
The Federal Reserve on 18 September 2024 have slashed interest rate by half a point to a range of 4.75% to 5.00%, the first time since raising it to its highs on 26 July 2023. This is a good indicator of potential future rate cuts which will greatly benefit REITs in reducing their finance costs.
Website: Fed slashes interest rates by a half point, an aggressive start to its first easing campaign in four years
As FCT have debts that are exposed to floating rate, any change in interest rate will result in FCT experiencing changes to their cost of debt. Below is the debt profile for FCT as of 30 September 2024:
| Description | Amount (SGD’000) |
|---|---|
| Total Debt | $2,043,800 |
| Debt Not Hedged (%) | 28.6% |
| Debt at Floating Rate Exposed | $584,527 |
| Distributable Income FY2024 | $214,313 |
I have performed the interest rate sensitivity analysis as below:
| Change in Interest Rates | Change in Distributable Income (SGD’000) | Change as % of FY2024 Distribution |
|---|---|---|
| 50 bps | $2,923 | 1.4% |
| 100 bps | $5,845 | 2.7% |
| 150 bps | $8,768 | 4.1% |
| 200 bps | $11,691 | 5.5% |
Do note the above is my estimation which may be different from management’s estimation. Nonetheless, if the interest rates were to change by the basis points above, FCT may experience a change in DPU accordingly.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | -0.9% | Unfavorable |
| Occupancy | 99.7% | Favorable |
| Gearing Ratio | 38.5% | Neutral |
| Interest Coverage | 3.4x | Favorable |
| Debt Maturity Profile | 2.5 years | Favorable |
| Price to Book Ratio | 0.98 | Favorable |
| Overall | Favorable |
Overall, there is nothing significant to report for this quarter and the metrics indicate that it remains Favorable to invest in FCT. There is assurance for investors until the next quarter update.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Background
FCT is a leading developer-sponsored REIT and one of the largest suburban retail mall owners in Singapore. FCT’s property portfolio comprises nine retail malls and an office building located in the suburban regions of Singapore, near homes and within minutes to transportation amenities.
FCT is among the top-ten largest Singapore REITs (“S-REITs”) by market capitalization. It is also an index constituent of several benchmark indices including the FTSE EPRA/NAREIT Global Real Estate Index Series (Global Developed Index), FTSE ST Real Estate Investment Trust Index, MSCI Singapore Small Cap Index and the SGX iEdge S-REIT Leaders Index.
Listed on the Main Board of the Singapore Exchange Securities Trading Limited since 5 July 2006, FCT is managed by Frasers Centrepoint Asset Management Ltd., a real estate management company and a wholly owned subsidiary of Frasers Property Limited.
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Website: Frasers Centrepoint Trust (SGX: J69U): 2024 Third Quarter Business Update
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