Frasers Centrepoint Trust

Frasers Centrepoint Trust (FCT) results were in line, with 1QFY14 distributable income at $20.6m (+4%), taking DPU to 2.50¢ (+4% y/y). Gross revenue and net property income (NPI) rose 5% and 4% to $40m and 28.3m respectively, due mainly to improved revenue from Causeway Point, following the successful completion of its asset enhancement. The quarter saw a slight decline in FCT’s portfolio occupancy at 96.7%, down 1.7 ppt from 98.4% in the preceding quarter, as Bedok Point’s occupancy rate declined to 80.2% from 96.7%, due to on-going renovation of shop spaces of incoming tenants and vacancy from expired leases in the quarter. Fundamentally, FCT’s balance sheet remains strong, with a comfortable leverage ratio of 29.7% and a weighted average debt maturity of 2.73 years. Meanwhile, its average lease expiry (WALE) stood at 1.77 years, with a well-staggered lease renewal schedule. Going forward, FCT expects the performance of its portfolio to remain stable, although guides that the next growth catalyst for FCT is likely to come from further acquisitions of pipeline assets. At the current price, FCT trades at a forward yield of 6.4% and 1.0x P/B versus the Retail REITS average of 6.8% forward yield and 0.93x P/B. Latest broker ratings as follows: CIMB maintains ADD with TP $2.05 SCB maintains In-line with TP $1.75