On 24 July 2025, Frasers Centrepoint Trust (“FCT”) announced their third quarter business update for FY2025. There has been a notable increase in aggregate leverage this quarter, which is unfavorable as it is close to the MAS limit of 50 per cent. The additional debt financing, as well as equity fund raising in April 2025, were used for the acquisition of Northpoint City South Wing during the quarter.
Do note that subsequent to quarter end on 2 July 2025, FCT announced the completion of issuance of SGD200 million 3.98 per cent subordinated perpetual securities. Management disclosed that assuming repayment of loans from proceeds of perpetual securities, this will lower the aggregate leverage to 40.4 per cent. This is likely management’s method to ensure that FCT is within MAS capital requirements and is also the first time FCT has issued perpetual securities.
With the above, there has been significant changes to the capital structure of FCT which puts unitholders on a lower priority in FCT in terms of liquidation and distribution payments.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: General Announcement::Business Updates For The Third Quarter Ended 30 June 2025
Website: REPL::General Announcement::Issue of S$200 Million 3.98% Subordinated Perpetual Securities
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | No Update | +0.6% |
| Rating | Favorable | Favorable |
Based on the announcement on 24 July 2025, DPU was not included in the business update for the third quarter of FY2025.
The metric was Favorable for the previous quarter, as DPU for the first half of FY2025 has increased by 0.6% to SGD0.06054 per unit from SGD0.06020 per unit in the second half of FY2024.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 99.9% | 99.5% |
| Rating | Favorable | Favorable |
Occupancy rate as of 30 June 2025 has strengthened to 99.9%. This metric remains Favorable as it is above my expected healthy occupancy rate of 95%. Do note that the occupancy rate above excludes Hougang Mall due to ongoing AEI works.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 42.8% | 38.6% |
| Rating | Unfavorable | Neutral |
Gearing ratio as of 30 June 2025 has increased to 42.8%. The increase was due to an increase in borrowings, with an amount of SGD2,857 million as of 30 June 2025 from SGD2,057 million in the previous quarter. The increase in borrowings was due to the acquisition of Northpoint City South Wing. The metric is Unfavorable.
Do note that perpetual securities amounted to SGD200 million as of 2 July 2025. This is not included in the gearing ratio and is not a concern from the regulatory perspective as perpetual securities will not cause a breach in regulation and force FCT to take unfavorable measures. However, perpetual securities rank higher than unit holders should liquidation occur and has priority payment over distributions, something investors will need to keep in mind.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.4x | 3.3x |
| Rating | Favorable | Favorable |
The adjusted interest coverage as of 30 June 2025 has remain relatively unchanged at 3.4 times. The metric remains Favorable as it is above my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.4 years | 3.0 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt as of 30 June 2025 has lengthened to 3.4 years. The metric remains Favorable as there is sufficient time to refinance their debts as they fall due. Do note that approximately 16.1% of their debt will mature by the end of FY2026.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.00 | 0.96 |
| Rating | Favorable | Favorable |
Based on the announcement on 24 July 2025, net asset value (“NAV”) was not included in the business update for the third quarter of FY2025.
The Price to Book (“P/B”) ratio became more expensive at 1.00. This is computed using the closing share price of SGD2.29 on 25 August 2025 and the net asset value per share of SGD2.28 as of 30 June 2025. The P/B ratio is Favorable as it is trading at its book value.
As of 25 August 2025, the Market Capitalization is approximately SGD4,647 million.
Website: Yahoo Finance: Frasers Centrepoint Trust (J69U.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.69% | SGD 0.062 |
| 2024 | 5.26% | SGD 0.120 |
| 2023 | 5.31% | SGD 0.122 |
| 2022 | 5.34% | SGD 0.122 |
| 2021 | 5.22% | SGD 0.120 |
| 2020 | 4.01% | SGD 0.092 |
Unchanged from previous quarter, the expected total payout for the calendar year 2025 is likely to be slightly higher than the calendar year 2024. As a conservative estimate, we will continue to use the amount of SGD0.120 per share for the calendar year 2024 as a base. With a closing share price of SGD2.29 on 25 August 2025, this translates to a dividend yield of 5.26%. For my benchmark, a general reasonable range would be around 4.75%. The dividend yield is Favorable.
Website: Reasonable Dividend Yield 2025Q3 – 4.75%
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 5.75% 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 8.9% to SGD2.09.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.29 | – |
| 5.75% | 2.09 | -8.9% |
| 6.75% | 1.78 | -22.4% |
Interest Rate Sensitivity
The Federal Reserve Chair Jerome Powell on 22 August 2025 gave a tepid indication of possible interest rate cuts ahead as he noted a high level of uncertainty that is making the job difficult for monetary policymakers. While he noted that the labor market remains in good shape and the economy has shown “resilience,” he said downside dangers are rising. At the same time, he said tariffs are causing risks that inflation could rise again — a stagflation scenario that the Federal Reserve needs to avoid.
Website: Powell indicates conditions ‘may warrant’ interest rate cuts as Fed proceeds ‘carefully’
The Federal Reserve on 31 July 2025 have left its key short-term interest rate unchanged for the fifth time this year, at a range of 4.25% to 4.50%. Powell also signaled that it could take months for the Fed to determine whether Trump’s sweeping tariffs will push up inflation temporarily or lead to a more persistent bout of higher prices. His comments suggest that a rate cut in September, which had been expected by some economists and investors, is now less likely.
Website: Fed’s Powell sticks with patient approach to rate cuts, brushing off Trump’s demands
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 June 2025:
| Description | Amount (SGD’000) |
|---|---|
| Total Debt | $2,857,000 |
| Debt Not Hedged (%) | 23.8% |
| Debt at Floating Rate Exposed | $679,966 |
| 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 | $3,400 | 1.6% |
| 100 bps | $6,800 | 3.2% |
| 150 bps | $10,199 | 4.8% |
| 200 bps | $13,599 | 6.3% |
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.
Other Metrics
Tenant profile
FCT has a well-diversified tenant profile with the top 10 customers as of 30 June 2025 account for about 18.6% of monthly portfolio gross rental income. Furthermore, no single tenant accounts for more than 5.9% 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
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | No Update | Favorable |
| Occupancy | 99.9% | Favorable |
| Gearing Ratio | 42.8% | Unfavorable |
| Interest Coverage | 3.4x | Favorable |
| Debt Maturity Profile | 3.4 years | Favorable |
| Price to Book Ratio | 1.00 | Favorable |
| Overall | Favorable |
Overall, the metrics remain Favorable to invest in FCT. The key thing to note is the significant increase in gearing ratio and issuance of perpetual securities. This translates to a change in the capital structure of FCT, which puts unitholders on a lower priority. There were no other significant changes noted during the 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): 2025 Half Year Result
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