Frasers Commercial Trust

Frasers Commercial Trust: SCB downgrades to In-line from OutPerform with $1.27 TP. House note that grp has risen 59% YTD, outperforming the SREIT index by 32%: Performance has been driven by its pro-active manager’s proposals to: (1) refinance debt to reduce interest expenses by 20%; (2) purchase 50% stake in Caroline Chisholm Centre, at 9% NPI yield; (3) sale of Keypoint at 25% above NAV; and (4) potential to repay debt and redeem outstanding convertible perpetual preference units (CPPUs) with the proceeds from Keypoint which could be 10% accretive. However, house believe most of the upside surprises are largely behind us. Current price target provides only 7.6% potential upside, in line with the SREIT sector average. Downside to the AUD/SGD could impact grp’s earnings given 42% of NPI is contributed by Australian assets. Accordingly, house downgrade rating to In-Line.