Fraser Commercial Trust

Fraser Commercial Trust: Announced 3Q11 results which was in-line.
Net Property Income at $24.9m, +10% yoy and +4.6% qoq, while distributable income at $8.7m, +13% yoy and -13% qoq.
Results driven by strong asset performance from KeyPoint and Aus properties, resulting in increase in NPI for last two qtrs, on back of rising occupancy and higher rentals. REIT also divested investment in the Australian Wholesale Property Fund and proceeds used to repay part of existing AUD loan resulting in interest savings. The full effect of the partial repayment would be seen in coming qtrs.

Operationally, average occupancy rates remain robust at 97.6% underpinned by healthy occupancy rates for SG and Aus portfolios of 97.3% and 99.9% respectively, while New leases commenced in the qtr include foreign mid-sized companies such as KHS Asia and Expereo. In Japan, occupancy rates remain at a healthy level of 93.0%. Only 3.1% of gross rental income due for renewal in FY11 in FY11 and Wale stood at a comfortable 3.8 yrs.
At current price, valuations are very compelling, with grp trading at 0.63x P/B and annualized FY11 yield of 6.5% (vs peers average of 0.8xP/B and 5.7% yield), while Leverage ratio stood at an acceptable 34.7% suggesting further headroom for debt raising.