Frasers Centrepoint Trust

Frasers Centrepoint Trust 3QFY14 results were in line, with distributable income of $25.5m (+8.6%), and DPU at 2.9¢ (+6.7% y/y), taking 9MFY14 DPU to 8.4¢ (+5.7%). Gross revenue and net property income rose 3.1% and 2.4% to $41.2m and $29.1m respectively, due to rental step-up of current leases, better rental rates achieved for new and renewed leases and the maiden contribution from Changi City Point, which was acquired in Jun ’14. The quarter saw Bedok Point’s occupancy improving to 99.3% from 77.0% in March, after several new tenants opened in 3Q14, while occupancy at the other five malls remained relatively stable during the quarter. Overall shopper traffic in 3Q14 (excluding Changi City Point) improved 2.7% q/q, with Causeway Point registering the strongest shopper traffic growth. Overall, FCT’s portfolio occupancy as at 31 Jun ‘14 stood at 98.5%, compared to 96.8% in the preceding quarter, while the entire portfolio average rental renewals in 2Q14 registered a 7.8% increase over the preceding leases contracted 3 years ago. Aggregate leverage remained comfortable at 30.2% and a weighted average debt maturity of 2.75 years. Performance of FCT’s portfolio is expected to remain stable, while the acquisition of Changi City Point is expected to strengthens FCT’s presence in the suburban mall sector, and is DPU accretive. At the current price, FCT trades at an annualized FY14 forecast yield of 6.3% and 1.0x P/B, in line with the retail REIT average of 6.3% forward yield and 1.0x P/B. Latest broker ratings: CS maintains Neutral with TP $2.12