On 23 January 2025, Frasers Centrepoint Trust (“FCT”) have announced their first quarter business update for FY2025. The main thing reported this quarter is that there are no longer any debts that are due to mature in FY2025. This is an indication that FCT have managed to renew their loans, which also contributes to the extended debt maturity profile as compared to the previous quarter. There are no other significant changes to be noted this quarter, which should give investors some peace of mind till the next financial update.
Do note that last night, U.S. central bank held interest rates steady and Federal Reserve Chair Jerome Powell said there would be no rush to cut them again until inflation and jobs data made it appropriate. This would indicate that interest rates may remain at these levels for a longer period of time. Investors will need to take note that borrowing costs may continue to increase if loans are continued to be renewed at existing rates.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: REPL::General Announcement::Business Updates For The First Quarter Ended 31 December 2024
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | No Update | -0.9% |
| Rating | Unfavorable | Unfavorable |
Based on the announcement on 23 January 2025, DPU was not included in the business update for the first quarter of FY2025.
The metric was Unfavorable in the previous update as 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%.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 99.5% | 99.7% |
| Rating | Favorable | Favorable |
Occupancy rate as of 31 December 2024 remained relatively unchanged at 99.5%. This metric remains Favorable as it is above my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 39.3% | 38.5% |
| Rating | Neutral | Neutral |
The gearing ratio as of 31 December 2024 increased to 39.3%. Noted the increase was likely due to an increase in borrowings, as it has increased to SGD 2,105 million as of 31 December 2024 from SGD 2,043 million in the previous quarter. The metric remains Neutral.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.3x | 3.4x |
| Rating | Favorable | Favorable |
The adjusted interest coverage for the trailing 12 months decreased to 3.3 times as of 31 December 2024. The metric remains Favorable as it is above my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.0 years | 2.5 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt lengthened to 3.0 years as of 31 December 2024. This is due to renewal of loans, as management have disclosed that there are no longer any borrowings due to mature in FY2025, compared to 15.7% in the previous quarter. The metric remains Favorable as there is now sufficient time to refinance their debts as they fall due. Do note that approximately 23.3% of their debt will mature in the next 2 years.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.93 | 0.98 |
| Rating | Favorable | Favorable |
Based on the announcement on 23 January 2025, net asset value (“NAV”) was not included in the business update for the first quarter of FY2025.
The Price to Book (“P/B”) ratio decreased to 0.93. This is computed using the closing share price of SGD2.13 on 28 January 2025 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 28 January 2025, the Market Capitalization is approximately SGD3,871 million.
Website: Yahoo Finance: Frasers Centrepoint Trust (J69U.SI)
Other Metrics
Tenant profile
FCT has a well-diversified tenant profile with the top 10 customers as of 31 December 2024 account for about 19.0% 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 | 5.65% | SGD 0.120 |
| 2023 | 5.70% | SGD 0.122 |
| 2022 | 5.74% | SGD 0.122 |
| 2021 | 5.61% | SGD 0.092 |
| 2020 | 4.31% | SGD 0.122 |
| 2019 | 4.22% | 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 SGD2.13 on 28 January 2025, this translates to a dividend yield of 5.65%. For my benchmark, a general reasonable range would be around 5.25%. The dividend yield is thus Favorable.
Website: Reasonable Dividend Yield 2025Q1 – 5.25%
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 6.25% 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 9.9% to SGD1.92.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.13 | – |
| 6.25% | 1.92 | -9.9% |
| 7.25% | 1.66 | -22.3% |
Interest Rate Sensitivity
The Federal Reserve on 30 January 2025 have kept interest rates unchanged at a range of 4.25% to 4.50%. This is due to significant uncertainty in the U.S. economic landscape, with a healthy set of macroeconomic fundamentals that have changed little in recent months, but coming decisions from the Trump administration on immigration, tariffs, taxes and other areas that could prove disruptive.
Website: Fed leaves rates unchanged, sees no hurry to cut again
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 31 December 2024:
| Description | Amount (SGD’000) |
|---|---|
| Total Debt | $2,105,400 |
| Debt Not Hedged (%) | 34.5% |
| Debt at Floating Rate Exposed | $726,363 |
| 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 | $3,632 | 1.7% |
| 100 bps | $7,264 | 3.4% |
| 150 bps | $10,895 | 5.1% |
| 200 bps | $14,527 | 6.8% |
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 | No Update | Unfavorable |
| Occupancy | 99.5% | Favorable |
| Gearing Ratio | 39.3% | Neutral |
| Interest Coverage | 3.3x | Favorable |
| Debt Maturity Profile | 3.0 years | Favorable |
| Price to Book Ratio | 0.93 | 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. Do note as well that this is a business update and therefore will disclose less information. Investors can keep an eye out for the financial update in the next quarter.
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 Full Year Result
