Frasers Centrepoint Trust

Frasers Centrepoint Trust (FCT) 4QFY14 results were in line, with distributable income of $25.5m (+3.8%), and core DPU at 2.79¢ (+5.9% y/y), taking FY14 DPU to 11.2¢ (+2.4%). Gross revenue and net property income rose 16.1% and 14.9% to $46.7m and $31.3m 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 (CCP), which was acquired in Jun ’14. During 4Q14, 46 leases accounting for 53,484 sf or 4.9% of FCT’s total NLA were renewed. The average rental of leases renewed in 4Q14 was 10.9% higher than that of the preceding leases which were typically contracted three years ago. For FY14, the portfolio achieved 6.5% increase in average rental for lease renewals, compared to 7.7% in FY13. FCT’s portfolio occupancy as at 30 Sep ‘14 stood at 98.9%, compared to 98.5% in the preceding quarter, while aggregate leverage remained comfortable at 29.3% and a weighted average debt maturity of 2.5 years. Performance of FCT’s portfolio is expected to remain stable, while the acquisition of CCP is expected to strengthen FCT’s presence in the suburban mall sector, and is DPU accretive. At the current price, FCT trades at an FY14 yield of 5.8% and 1.05x P/B, versus the retail REIT average of 6.2% current yield and 1.0x P/B. Latest broker ratings CIMB maintains Add with TP $2.18 OCBC maintains Buy with TP $2.08