Tuesday, July 21, 2015

Frasers Commercial Trust

Frasers Commercial Trust: 3Q15 distributable income for the commercial REIT of $16.1m (+8.8% y/y, -0.7% q/q) and DPU of 2.35¢ (+7.3% y/y, -1.3% q/q), brought 9M15 DPU to 7.19¢, 73% of the street’s FY15 estimate.

Gross revenue came in at $34.7m (+17% y/y, -0.3% q/q) while NPI was $24.3m (+6.1% y/y, -1.6% q/q). The on-year improvement was mainly from its Singapore properties. In particular, Alexandra Technopark more than doubled its revenue contribution following its conversion into a multi-tenanted asset upon expiry of its master lease in Aug 2014.

However, its sequential performance exhibited signs of weakness. The chief culprit was the depreciating AUD (-1.4% q/q), which led to lower rental income from Central Park (-1.5% q/q) and Caroline Chisholm Centre (-1.8% q/q) in Australia, and overshadowed revenue growth from China Square Central (+0.2% q/q), 55 Market Street (+1.4% q/q) and Alexandra Technopark (+0.5% q/q) in Singapore.

Portfolio-wise, occupancy slid 1.4ppt to 95.1% with weighted average lease expiry of 3.4 years, while aggregate leverage stood at 37.3% with an all-in borrowing cost of 3.0%.

At its current price, FCOT is offering an annualised 3Q15 yield of 6.1% and trades at 1x P/B. The street remains bullish of the REIT with 7 Buy ratings and a consensus TP of $1.68.

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