Frasers Centrepoint Trust (FCT) has reported a distribution per unit (DPU) of 12.15 cents for the FY2023 ended Sept 30, 0.6% lower y-o-y. DPU for the 2HFY2023 fell by 1.2% y-o-y to 6.02 cents.
During the 2HFY2023, gross revenue rose by 1.8% y-o-y to $184.1 million due to higher rental income. The higher rental income was, in turn, attributed to a higher portfolio occupancy, higher rental reversions, increased contributions from atrium leasing and car park income. The growth was offset by Tampines 1, which is currently undergoing asset enhancement initiatives (AEI).
Gross revenue for the FY2023 rose 3.6% y-o-y to $369.7 million.
Net property income (NPI) for the 2HFY2023 was up by 1.1% y-o-y to $129.6 million as property expenses rose due to higher utilities expenses, higher repair and maintenance costs, higher staff costs and lower write-back of doubtful receivables.
FY2023 NPI was up by 2.7% y-o-y to $265.6 million in spite of the 5.9% y-o-y increase in property expenses due to the higher gross revenue.
Distributable income for the 2HFY2023 fell by 0.7% y-o-y to $103.1 million as FCT released $3.0 million of its distributable income retained in the 1HFY2023 but retained $1.1 million of its current distributable income. In the 2HFY2022, the REIT released $4.8 million of its distributable income retained in the half-year period before and retained $1.7 million of its current period’s income at the time.
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FY2023 distributable income dipped by 0.2% y-o-y to $207.7 million.
As at Sept 30, FCT’s portfolio committed occupancy stood at 99.7%, compared to the 97.5% in Sept 30, 2022. Committed reversion stood at 4.7% in FY2023, compared to FY2022’s 4.2%. Portfolio weighted average lease expiry (WALE) stood at 1.96 years by net lettable area (NLA) and 1.82 years by gross rental income (GRI).
Shopper traffic in the FY2023 rose by 24.7% y-o-y while tenants’ sales rose by 7.3% y-o-y. All figures do not include Tampines 1.
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As at Sept 30, FCT’s aggregate leverage fell by 0.9 percentage points q-o-q to 39.3%. This is expected to fall further to 36.1% on a pro forma basis upon the completion of the divestments of Changi City Point and the interest in Hektar REIT. Interest coverage ratio stood at 3.47x, down from 3.89x a quarter ago.
The total appraised value of FCT’s retail portfolio rose by 0.6% to $8.74 billion as at Sept 30 due to the higher valuations of Nex and Causeway Point, which registered valuation increases of $22.2 million and $13.0 million respectively. Five other malls, Tampines 1, Northpoint City North Wing, Waterway Point, Tiong Bahru Plaza and Hougang Mall, also saw valuation increases of between $2 million and $7 million. The capitalisation rates used by the independent valuers remained unchanged from last year.
As at Sept 30, cash and cash equivalents stood at $32.2 million.
“FCT delivered a strong set of financial results in FY2023, underscored by improved financial and robust operating performances. During the year, we made five key announcements which are the acquisition of the 25.50% effective interest in Nex, the acquisition of the additional 10.00% interest in Waterway Point, the AEIs at Tampines 1, the divestment of Changi City Point and the divestment of FCT’s interest in Hektar REIT. The aggregate value of these transactions and initiatives is about $1.1 billion, demonstrating our proactive portfolio management despite challenging market conditions,” says Richard Ng, CEO of the manager. “These strategic steps enable FCT to recycle its capital effectively, bolster its financial position and portfolio strength while reinforcing its leading market position in the Singapore suburban retail sector.”
“While the macroeconomic environment is challenging, we remain positive on the outlook of the suburban retail sector in Singapore, based on several factors such as Singapore’s population growth, sustained healthy consumer spending on essentials, healthy demand for prime suburban retail space and tight supply in the retail market. We believe FCT is well-positioned to benefit from these factors going forward,” he adds.
Looking ahead, the manager says it expects interest rate movements and rising operating expenses to remain the key factors affecting the REIT’s performance. Barring unforeseen circumstances, it expects the average cost of borrowing for FCT to be above 4%.
“For operating expenses, the manager will continue to work on cost optimisation initiatives, and to remain vigilant on the movement of energy prices and contracted service fees. It will adopt appropriate hedging strategies for energy contracts to mitigate the impact on its operating expenses,” says FCT in its Oct 25 statement.
Unitholders will receive their DPUs on Nov 29.
Units in FCT closed 7 cents higher or 3.42% up at $2.12 on Oct 24.
