SINGAPORE (Feb 19): Frasers Centrepoint Trust is fortunate in that its two biggest suburban malls are in areas where there is little or no competition and its portfolio continues to notch up higher rents and net property incomes. Altogether, FCT owns six malls on the island.
“Causeway Point continued to contribute the highest positive rental reversions at 5.5%, for 23 leases renewed for 7% of NLA [net lettable area],” says Chew Tuan Chiong, CEO of FCT’s manager. “Causeway Point will continue be a strong performer.” The mall is the REIT's second-largest mall in Woodlands in northern Singapore. Chew expects Northpoint City North Wing’s occupancy and rents to rebound after its asset enhancement initiative. “Overall, we are much happier than this time last year.”
For 1QFY2018 ended Dec 31, FCT’s distribution per unit was three cents, up 3.8% y-o-y. This was the result of gross revenue rising 8.7% y-o-y and net property income increasing 9.1%. DPU was also enhanced because the proportion of management fee to be paid in units was 50% for 1QFY2018. A year ago, 70% of management fee was paid in units. This will be progressively decreased as Northpoint — which had undergone AEI — starts trading again on full occupancies.
It is interesting that all three pure-play Singapore-focused retail real estate investment trusts turned in resilient performances in FY2017. CapitaLand Mall Trust — despite facing headwinds — announced a DPU of 11.16 cents, up 0.3% y-o-y. FCT, which has a September year-end, announced a DPU of 11.9 cents, up 1.2% y-o-y. SPH REIT’s DPU rose 0.5% to 5.53 cents. It has an August year-end. Its 1QFY2018 DPU was flat at 1.34 cents. (SPH REIT’s income support for one of its two malls, Clementi Mall, falls off this year.)
In comparison with the resilience of retail REIT DPUs, almost all the hospitality REITs announced declines in DPU, as did the two largest commercial REITs and around 70% of the industrial REITs.
Since the start of the year, units in CMT have fallen 7.5%, while FCT has lost just 4.9%, reflecting its better portfolio performance. SPH REIT has declined 24.2%.
FCT offers DPU resilience, while CMT’s valuation and debt profile should provide shelter from the storm should interest rates rise.
