Frasers Commercial Trust

Frasers Commercial Trust (FCOT) 3QFY14 results were largely in line, with distributable income of $14.8m (+3.0%) and DPU of 2.19¢ (flat y/y), taking 1H14 DPU to 4.12¢ (flat y/y). Gross revenue and net property income (NPI) both fell 1.0% to $29.6m and $22.9m respectively, mainly due to the weaker Australian dollar, although this was offset by higher gross revenue from the REIT’s Singapore properties (+3.0%), mainly due to higher occupancy and rental rates achieved by Central Square Central. Despite the lower gross revenue and NPI, the higher DPU was a result of savings from CPPU conversion and redemption. Overall, FCOT’s portfolio occupancy as at 31 Mar ‘14 stood at a strong 98.0% with a healthy weighed average lease to expiry (WALE) of 3.9 years and a fairly stable aggregate leverage of 37.7%. Going forward, FCOT will continue to focus on maintaining the strong occupancy rates for its portfolio and manage the expiring leases proactively. The expiry of the master lease at Alexandra Technopark in Aug ‘14 will also further boost the performance of the Trust and provide greater growth. At the current price, FCOT trades at an annualized FY14 yield of 6.2% and 0.90x P/B versus its commercial peers average of 6.1% yield and 0.89x P/B. Latest broker ratings: OCBC maintains Buy with TP $1.48.