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Letter to Unitholders
Dear Unitholders
We are pleased to present Frasers Centrepoint Trust and its subsidiaries’ (“FCT” and the “FCT Group”) Annual Report and Sustainability Report for the financial year ended 30 September 2022 (“FY2022”).
Year of recovery but hampered by geopolitical and trade tensions, persistent inflation and rising interest rates
As we transitioned progressively in the past year to the endemic phase of COVID-19, new challenges continued to emerge. We saw the war break out between Ukraine and Russia; wild swings in energy and commodity prices; aggressive rate hikes by the U.S. Federal Reserve; rising geopolitical and trade tensions as well as persistent inflation.
These challenges cast a long shadow over recovery of businesses and an economy still reeling from the COVID-19 pandemic. The capital markets have also been severely impacted as investors remained concerned about the impact on business earnings due to soaring operating and borrowing costs, supply chain disruptions, persistent inflation and deteriorating growth outlook. The Singapore REIT benchmark index, the FTSE REIT Index, retreated 13.25% during FY2022 as yields rose with rising interest rates. Analysts have also lowered their earnings forecasts for the REIT sector, citing rising interest rates, higher operating costs and slower growth prospects as reasons that would impact the financial performance of REITs in the near-term.
Opportunities ahead to cushion the impact
Notwithstanding these challenges, FCT has remained steadfast in managing its asset portfolio to deliver resilient performance and steady returns to its Unitholders. The Manager sees several opportunities that can help cushion the impact. These include rent growth and higher ancillary income. Data from CBRE shows prime retail rents in both Orchard Road and suburban malls are firming up. This bodes well for retail landlords. Other opportunities include asset enhancement initiatives (“AEI”) for value creation and higher contributions from the acquisition of the additional 10.00% stake in Waterway Point to be completed in FY2023. The Manager will stay vigilant on cost movements such as energy prices and contracted service fees and will adopt appropriate hedging strategies to manage the risks.
FY2022 PERFORMANCE REVIEW
Higher gross revenue, NPI and DPU; healthy financial position
FCT closed FY2022 with higher gross revenue, net property income (“NPI”) and distribution per unit (“DPU”). Gross revenue rose 4.6% year-on-year to S$356.9 million and NPI was 4.9% higher at S$258.6 million. The increase was attributed to full year contribution from the enlarged retail portfolio following the completion of the ARF Acquisition in FY2021; the absence of rental rebates provided to tenants in FY2021; and an increase in atrium income with the lifting of restrictions on atrium events in late March 2022. The increase was partially offset by the loss of contribution from properties divested in FY2021. The stronger financial performance lifted distribution to Unitholders in FY2022 by 1.7% to S$208.2 million and DPU by 1.2% to a new high of 12.227 Singapore cents from 12.085 Singapore cents last year.
FCT's financial position remained healthy with aggregate leverage at 33.0% and interest coverage ratio at 5.19 times. 70.5% of FCT’s total borrowings are on fixed interest rates and average cost of debt for FY2022 stood at 2.5%.
The aggregate appraised value of FCT’s investment portfolio remained stable at approximately S$5.5 billion with no change in valuation capitalisation rates used by the independent valuers. Net asset value per unit as at 30 September 2022 rose 1.3% to S$2.33 from S$2.30 a year ago.
Broad-based operating performance improvement
FCT achieved broad based improvements in operating performance with double-digit percentage year-on-year increases in shopper traffic and tenants’ sales, positive rental reversion, higher portfolio occupancy and lower retail portfolio occupancy cost.
The retail property portfolio registered improved committed occupancy of 97.5% as at 30 September 2022, up 0.2%-points year-on-year. The larger malls - Causeway Point, Waterway Point and Northpoint City North Wing - continued to maintain strong occupancies, with Causeway Point and Northpoint City North Wing registering 100% occupancy. Tampines 1 and Causeway Point registered the largest year-on-year improvement in occupancy of 2.0%-points and 1.4%-points respectively. The rental portfolio achieved better average rental reversion of 1.5% (on incoming versus outgoing basis) compared with the previous year’s -0.6%.
Strong tenants’ sales and shopper traffic growth; more than 70 new-to-FCT brands introduced
The easing of the COVID-19 safe management measures since end-March 2022 helped lift shopper traffic and tenants’ sales of the retail portfolio. Shopper traffic and tenants’ sales in FY2022 rose 12.4% and 11.3% year-on-year, respectively. With higher tenants’ sales, occupancy cost for the retail portfolio continued to improve to 16.2% in FY2022, down from 19.2% in FY2020 and 17.5% in FY2021, providing headroom for rental growth.
We were able to attract more than 70 new-to-FCT brands to our malls in FY2022. Some notable brands include the first Don Don Donki in the North at Northpoint City, new-to-Singapore Café BomBom from South Korea which opened at Tampines 1 and Tiong Bahru Bakery’s first outlet in a suburban mall at Waterway Point. These new tenants are testament to the strong appeal and relevance our suburban malls continue to have for both retailers and shoppers.
Making progress in our sustainability journey
Sustainability is a core component of FCT’s business strategy. The Manager works closely with FCT’s Sponsor, Frasers Property Limited (“Frasers Property” or the “Group”) towards the Group’s goal to net-zero carbon by 2050. We have made notable progress in our sustainability journey in FY2022. We introduced Technology Risk Management and Environmental Risk Management in our governance framework and aligned our climate-rated disclosures with the Task Force on Climate-Related Financial Disclosures (”TCFD”) recommendations.
For the second consecutive year, we achieved a 5-Star rating in the 2022 GRESB Real Estate Assessment. We believe this is a meaningful benchmark that enables our stakeholders to compare FCT’s performance with its global real estate peers in the same sector. FCT has also received an “A” rating from the MSCI ESG Ratings in May 2022, improving from its previous “BBB” rating, for advancing in its management of financially relevant ESG risks and opportunities.
We invite you to read the details in the Sustainability Report which is an integral part of this Annual Report.
Looking ahead - FCT is well-positioned to ride the rising trends
The COVID-19 pandemic has transformed many aspects of the way we live, work and play, which include the rise of omnichannel retailing and shift to hybrid work arrangement. FCT is well-positioned to benefit from these trends due to its portfolio properties’ competitive advantages of being near homes and transportation nodes, focus on diversified essential trade and services, high quality amenities and a well-established shopper loyalty program.
The COVID-19 pandemic has transformed many aspects of the way we live, work and play, which include the rise of omnichannel retailing and shift to hybrid work arrangement. FCT is well-positioned to benefit from these trends due to its portfolio properties’ competitive advantages of being near homes and transportation nodes, focus on diversified essential trade and services, high quality amenities and a well-established shopper loyalty program.
Looking ahead, the Manager remains focused on the financial and operational performance of the FCT portfolio to optimise returns to the Trust and its Unitholders. It will also continue to look at AEI of its properties for value creation and acquisition opportunities. The opportunities in the Sponsor’s pipeline include Northpoint City South Wing, which is owned by Frasers Property and the TCC Group.
Shopper traffic at 50-70% of pre-COVID level
Overall shopper traffic in FY2021 was between 50% and 70% of the pre-COVID level. On a comparable basis, the aggregate shopper traffic of Causeway Point, Northpoint City North Wing, Changi City Point and Waterway Point was reduced by about 14% to 83.4 million from 96.6 million in FY2020.
The recovery of tenants’ sales and shopper traffic will depend on how COVID-19 develops, for better or worse, and the government’s response.
ACKNOWLEDGEMENTS
We welcome Ms Soon Su Lin who was appointed to the board on 1 March 2022 as Non-Executive and Non-Independent Director. Su Lin brings on board a wealth of real estate industry experience in retail property development and investment, real estate consultancy, leasing and management leadership.
We thank Mr Christopher Tang, who retired from the FCAM board as Director at the end of 2021 after 16 years of illustrious service. He also served as the first Chief Executive Officer of FCAM from July 2006 to March 2010. We thank Christopher for his invaluable contributions and wish him all the best in his future endeavours.
In closing, we would like to express appreciation to our board members for their stewardship and advice, and the management and staff for their commitment and hard work. We are grateful to our stakeholders, including our Unitholders, tenants and shoppers as well as our business partners for their confidence and support.
Cheong Choong Kong
Chairman
Richard Ng
Chief Executive Officer
Dr Cheong Choong Kong
Dr Cheong Choong Kong
Chairman, Non-Executive and Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022) |
|---|---|
| 18 May 2016 | 6 years and 4 months |
Board committees served on:
- Audit, Risk and Compliance Committee (Member)
- Nominating and Remuneration Committee (Member)
Academic & Professional Qualifications
- Bachelor of Science, Adelaide University
- Master of Science, Australian National University
- Doctor of Philosophy, Australian National University
- Doctor of Science (Honorary), Australian National University
- Degree of Doctor of the University (Honorary), Adelaide University
Present directorships in other companies as at 30 September 2022
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- Nil
Major appointments (other than Directorships)
- Chairman, NUS Mind Science Centre Advisory Board
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022)
- Nil
Past major appointments
- Chairman, Oversea-Chinese Banking Corporation Limited
- Chairman, Singapore Broadcasting Corporation
- Chairman, NUS Council
- Deputy Chairman and CEO, Singapore Airlines Limited
Mr Ho Chai Seng
Mr Ho Chai Seng
Non-Executive and Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022) |
|---|---|
| 30 June 2017 | 5 year 3 months |
Board committees served on:
- Nominating and Remuneration Committee (Chairman)
- Audit, Risk and Compliance Committee (Member)
Academic & Professional Qualifications
- Bachelor of Commerce, University of Windsor, Canada
- Member, Singapore Institute of Directors
- Member, International Bankers Association of Japan
Present directorships in other companies (as at 30 September 2022)
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- Nil
Major appointments (other than Directorships)
- Executive Director and Country Manager, United Overseas Bank Ltd, Tokyo Branch
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022)
- Nil
Past major appointments
- Vice President, BHF-Bank, New York
- Assistant General Manager, BHF-Bank, Singapore
- General Manager, DBS Bank, London
- General Manager, United Overseas Bank Ltd. London
- Executive Director, United Overseas Bank Ltd. Singapore
Mr Ho Chee Hwee Simon
Mr Ho Chee Hwee Simon
Non-Executive and Non-Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022) |
|---|---|
| 9 February 2017 | 5 years and 7 months |
Board committees served on:
- Audit, Risk and Compliance Committee (Member)
- Nominating and Remuneration Committee (Member)
Academic & Professional Qualifications
- Bachelor of Science (Estate Management) (Honours), National University of Singapore
- Master of Real Estate, National University of Singapore
Present directorships in other companies (as at 30 September 2021)
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- ALPS Pte. Ltd. (formerly known as Agency for Healthcare Supply Chain Pte. Ltd.)
- Frasers Hospitality International Pte. Ltd.
- Frasers Property (Singapore) Pte. Ltd.
Major appointments (other than Directorships)
- Nil
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022):
- Nil
Past major appointments
- Deputy CEO of CapitaLand Mall Asia Limited (formerly known as CapitaMalls Asia Limited)
- CEO of the Manager of CapitaLand Mall Trust (formerly known as CapitaMall Trust)
Others
- Previously on the Board of directors of the managers of CapitaLand Mall Trust (which is listed on the Singapore Exchange Securities Trading Limited) and CapitaLand Malaysia Mall Trust (which is listed on Bursa Malaysia)
Ms Koh Choon Fah
Ms Koh Choon Fah
Non-Executive and Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022) |
|---|---|
| 1 October 2019 | 3 years |
Board committees served on
- Audit, Risk and Compliance Committee (Chairman)
- Nominating and Remuneration Committee (Member)
Academic & Professional Qualifications
- Bachelor of Science (Estate Management) (Honours), National University of Singapore
- Master of Art (Business Administration), University of Georgia (Athens) / United States of America
- Fellow, Royal Institute of Chartered Surveyors
- Fellow, Singapore Institute of Surveyors & Valuers
Present directorships in other companies (as at 30 September 2022)
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- Edmund Tie Holdings Pte. Ltd.
- New Horizons Holdings Pte. Ltd.
- CPG Corporation Pte Ltd
- GLP REIT Management Pte. Ltd.
Major appointments (other than Directorships)
- Global Governing Trustee, Urban Land Institute, USA
- Executive Committee Member and Chairperson of Nominations Committee, Urban Land Institute Singapore Council, Singapore
- Management Board Member, National University of Singapore Institute of Real Estate and Urban Studies, Singapore
- Council Member and Vice-Chairperson of Professional Development Committee, Council for Estate Agencies, Singapore
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022)
- Nil
Past major appointments
- Chief Executive Officer, Edmund Tie & Company (SEA) Pte. Limited
- Chief Operating Officer, DTZ Debenham Tie Leung (SEA) Pte. Ltd. (now known as Edmund Tie & Company (SEA) Pte. Limited)
- Chairperson, Urban Land Institute Singapore Council, Singapore
Mr Low Chee Wah
Mr Low Chee Wah
Non-Executive and Non-Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022) |
|---|---|
| 3 January 2020 | 2 year and 9 months |
Board committees served on:
- Nil
Academic & Professional Qualifications
- Bachelor of Economics, Monash University
- Bachelor of Laws, Monash University
- Fellow of CPA Australia
- Fellow of Chartered Accountant of Singapore
Present directorships in other companies (as at 30 September 2022)
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- President, Real Estate Investment Trust Association of Singapore (REITAS)
- Chairman, Audit, Risk and Governance Committee, Dover Park Hospice
- Board Member, Singapore River One Limited
Major appointments (other than Directorships)
- Chief Executive Officer, Frasers Property Retail, Frasers Property (Singapore) Pte. Ltd
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022):
- Frasers Commercial Asset Management Ltd., Manager of Frasers Commercial Trust1
Past major appointments
- Senior Executive Vice President, Head of Retail and Commercial Division, Frasers Property Limited
- Chief Executive Officer of Frasers Commercial Asset Management Ltd, manager of Frasers Commercial Trust
- Chief Executive Officer of BNP Paribas Peregrine (Singapore) Ltd., investment banking arm of BNP Paribas Singapore
- Frasers Commercial Trust has been merged with Frasers Logistics & Industrial Trust with effect from 15 April 2020, to form Frasers Logistics & Commercial Trust.
Ms Soon Su Lin
Ms Soon Su Lin
Non-Executive and Non-Independent Director
| Date of appointment as director | Length of service as director (as at 30 September 2022): |
|---|---|
| 1 March 2022 | 7 months |
Academic & Professional Qualifications
- Master in Business Administration, National University of Singapore
- Bachelor of Science - Estate Management (Hons), National University of Singapore
Present directorships in other companies
Listed companies
- Nil
Listed REITs/Trusts
- Nil
Others
- Nil
Major appointments (other than Directorships)
- Chief Executive Officer of Frasers Property Singapore
- Member of the Integrated Development Council, Urban Land Institute, Singapore
Past Directorships in listed companies held over the preceding 3 years (from 1 October 2019 to 30 September 2022):
- Nil
Past major appointments
- Chief Executive Officer (Development) of Frasers Property Holdings (Thailand) Co., Ltd.
- Chief Executive Officer (Development) of TCC Assets (Thailand) Co., Ltd.
- Chief Executive Officer of Orchard Turn Developments Pte. Ltd.
Trust management team
Mr Richard Ng
Mr Richard Ng
Chief Executive Officer
Richard is responsible for the overall business direction, investment strategies and operations of FCT. He leads the FCAM management team to ensure that FCT’s finance, investment, asset management, investor relations and other plans and initiatives are executed successfully.
Richard has over 30 years of experience in the Singapore and regional property markets, spanning the areas of marketing, investment, asset and REIT management. Prior to joining Frasers Property, he was Executive Director, Asset Management, at PGIM (Singapore) Pte. Ltd. where he oversaw the portfolio asset management comprising retail and commercial properties in Singapore and Malaysia. Richard has held senior management appointments during his 14 years at the CapitaLand Group, including 10 years at CapitaLand Mall Trust (CMT) where he was part of the team that oversaw the initial public offering of CMT in 2002. At CMT, Richard was the Head of Asset Management, responsible for overall performance of CMT’s assets.
Richard holds a Bachelor of Science (Honours) degree in Estate Management and a Master of Science degree in Real Estate, both from the National University of Singapore.
Ms Audrey Tan
Ms Audrey Tan
Chief Financial Officer
Audrey is responsible for the financial, taxation, treasury and compliance functions of FCT. She has over 20 years of financial experience in locally-listed and multinational companies. Prior to joining FCAM, she was Head of Finance (Frasers Property Retail) at Frasers Property Limited. Prior to joining Frasers Property Limited, she held various positions at CapitaLand Limited (including its subsidiaries) for more than 10 years. Audrey holds a Bachelor’s degree of Business (Accountancy) from RMIT and is a Certified Practising Accountant with CPA Australia.
Ms Pauline Lim
Ms Pauline Lim
Head, Investment & Asset Management
Pauline is responsible for the management of FCT’s portfolio of retail assets in Singapore. She has over 20 years of real estate experience. Prior to joining FCAM, she was the Executive Director at PGIM Real Estate (“PGIM”) and was responsible for the portfolio management of PGIM Real Estate AsiaRetail Fund and another private equity co- investment which together own several malls in Singapore and Malaysia. Before PGIM, Pauline was Vice-President, Investment Management of GIC Real Estate (GIC RE), where she was responsible for investment and asset management in the office, retail and residential sectors in various Asia Pacific markets and supported GIC RE senior management in global portfolio reporting, asset strategy and planning. Prior to GIC RE, she held various roles at DBS and Jones Lang LaSalle in Singapore and Hong Kong.
Pauline holds a Master of Business Administration degree from the University of Western Australia and a Bachelor’s degree in Business Administration from the National University of Singapore.
Mr Chen Fung Leng
Mr Chen Fung Leng
Vice President, Investor Relations
Fung Leng is responsible for FCT’s investor relations function. He has more than 15 years of experience in the field of investor relations and is responsible for communications and forging relations between FCT and its Unitholders, the investment community and the media. He also provides market intelligence and research to the management team and oversees sustainability reporting for FCT.
Fung Leng holds a Master of Science degree in Industrial and Systems Engineering and a Bachelor’s degree in Mechanical Engineering (Honours), both from the National University of Singapore.
Mr Adrian Tan
Mr Adrian Tan
Head, Investment
Adrian is responsible for FCT's investment function. He joined the Frasers Property Group in 2018. Prior to joining Frasers, he spent 12 years in various investment and asset management roles for other established real estate developers including the CapitaLand Group, Ascendas-Singbridge Group, and NTUC Income. He has extensive experience in the acquisition, asset management and the divestment of real estate assets across multiple sectors including office, retail and logistics / business parks. In addition to his core market experience in Singapore, he is also experienced in overseas markets including Australia, Malaysia and India. Adrian has represented Singapore as a Trade Counsellor in Singapore’s Embassy in Russia.
Adrian Tan Holds an Honours degree in Business Administration from the National University of Singapore.
