Frasers Commercial Trust

Frasers Commercial Trust (FCOT) : Fraser initiates at Buy with TP $1.47. Notes FCOT is expected to witness a significant upli􀅌 in its distributions in FY14 and FY15. Drivers behind the projected distribution growth include the full‐year impact of the redemption and conversion of convertible perpetual preferred units (CPPUs) in FY13, expiry of master lease at Alexandra Technopark and positive rent reversions across its portfolio assets. Moreover, FCOT has a visible acquisition pipeline, which could provide it with an additional layer of growth. FCOT’s FY14 yield is projected at 7%, which makes it a very attractive yield play among the office REITs (average yield 5.9%). On a price‐to‐book (P/ B) basis, FCOT also looks relatively more attractive to its REITs and business trust peers, with a P/B ratio of 0.87 (REITs average P/B is 0.98). FCOT is a developer-sponsored commercial REIT that invests primarily in quality income‐producing commercial office properties in both Singapore and Australia, with its current porfolio consisting of China Square Central, 55 Market Street, Alexandra Technopark, Caroline Chisholm Centre and Central Park.