SINGAPORE, 23 OCTOBER 2019
Frasers Centrepoint Asset Management Ltd. (“FCAM”), the manager of Frasers Centrepoint Trust (“FCT” or the “Trust”), is pleased to announce distribution per unit (“DPU”) of 2.913 cents for the period from 1 July to 30 September 2019 (“4Q19”), up 1.8% year-on-year. This brings the total DPU for the financial year ended 30 September 2019 (“FY2019”) to a new high at 12.07 cents.
Unitholders can expect to receive their DPU for 4Q19 on 29 November 2019. The Ex-Date is 31 October 2019 and the Books Closure Date is 1 November 2019.
Mr Richard Ng, Chief Executive Officer of FCAM, said, “We are delighted that the Trust has delivered another quarter of good performance to close FY2019 on a strong note. FY2019 is a transformational year for FCT. The Trust invested $910 million to acquire significant stakes in PGIM Real Estate AsiaRetail Fund Limited (“PGIM ARF”) and in Waterway Point, which reinforced FCT’s position and enlarged its market share in the Singapore suburban retail sector. Together with the opportunity to acquire suburban retail assets from its sponsor Frasers Property, FCT now has a very strong pipeline of assets in Singapore, setting the stage for an exciting phase of growth.
For next few years, we will be focusing on improving the performance of the properties in our portfolio and those in our joint ventures and associates, as well as executing our strategies to drive FCT’s growth and to optimise returns to our unitholders. Our focus will continue to be in Singapore and in the suburban retail sector.”
Summary of 4Q19 and FY2019 Results
|
4Q19 1/7/19 to 30/9/19 |
4Q18 1/7/18 to 30/9/18 |
Increase/ (Decrease) |
FY2019 1/10/18 to 30/9/19 |
FY2018 1/10/17 to 30/9/18 |
Increase/ (Decrease) |
Gross revenue ($’000) |
48,269 |
48,511 |
(0.5%) |
196,386 |
193,347 |
1.6% |
Net property income ($’000) |
32,849 |
32,878 |
(0.1%) |
139,283 |
137,186 |
1.5% |
Income available for distribution ($’000) |
30,434 |
25,808 |
17.9% |
118,718 |
111,316 |
6.6% |
Distribution to unitholders ($’000) |
32,553 |
26,549 |
22.6% |
119,652 |
111,316 |
7.5% |
Distribution per unit (cents) |
2.913¢ |
2.862¢ |
1.8% |
12.07¢ |
12.015¢ |
0.5% |
Net asset value and net tangible asset value per unit ($)1 |
$2.21 |
$2.08 |
6.3% |
|
FCT portfolio continues to deliver steady performance
FCT reported gross revenue of $48.3 million and net property income (“NPI”) of $32.8 million for 4Q19, both marginally lower compared with the same period last year. Excluding non-cash accounting adjustments2 which would reflect actual operating performance, the revenue and NPI in 4Q19 were 2.7% and 4.8% better year-on-year, due to higher average portfolio occupancy and higher contributions from Northpoint City North Wing, Changi City Point and YewTee Point. Overall property expense was 1.4% lower year-on-year and the NPI margin remained stable.
Distributable income for 4Q19 was $30.4 million, up 17.9% year-on-year, mainly due to additional contributions3 from FCT’s shareholding in PGIM ARF and its shareholding in Sapphire Star Trust which holds Waterway Point.
Financial position remains strong
FCT’s financial position remains strong with gearing level at 32.9%4 as at 30 September 2019. The all-in average cost of borrowings was 2.6%, stable compared with the same period last year. The weighted average debt maturity was 2.3 years. FCT has approximately 50% of its borrowings on fixed or hedged-to-fixed interest rates.
Higher appraised valuation of investment properties
Total appraised value of FCT’s portfolio of investment properties as at 30 September 2019 stood at $2,846 million, which is $97 million or 3.5% higher than the $2,749 million recorded a year ago. Causeway Point registered the largest increase of $80 million to $1,298 million. The remaining properties registered between 0% and 3.2% increase in appraised values. The revaluation surplus was $93.3 million after including accounting adjustments5 of about $1.3 million.
Stable operation performance with +4.8% average rental reversion for FY2019
During 4Q18, a total of 63 leases accounting for 66,304 square feet of net lettable area (“NLA”) were renewed at an average rental reversion of +3.9%. All properties, except Bedok Point, registered positive rental reversion in 4Q19. The portfolio average rental reversion for the full year FY2019 is +4.8% compared with +3.2% achieved in FY2018.
The portfolio occupancy as at 30 September 2019 was 96.5%, higher than the 94.7% registered in the same quarter in the previous year. Causeway Point’s occupancy was 97.0%, lower compared with 98.4% last year due to the ongoing works relating to the construction of the underground pedestrian link (the “UPL”) at its basement level, which is expected to complete in December 2019. Anchorpoint’s occupancy currently at 79.0%, is expected to improve to 94.2% when the new tenants complete their fitting-out progressively in October and November 2019.
4Q19 portfolio shopper traffic was 8.9% higher year-on-year, attributed mainly to the increase in shopper traffic at Northpoint City North Wing after the opening of the new Yishun bus interchange. The portfolio tenants’ sales for the three-month period from June to August 2019 was flat compared with the same period last year. The higher tenants’ sales year-on-year growth registered at Northpoint City North Wing, Changi City Point, YewTee Point and Waterway Point during the period were offset mainly by the decline at Causeway Point. Causeway Point saw decline in tenants’ sales due to the UPL works and the lease termination of certain tenants in the computer trade sector in early 2019. The tenants’ sales performance in other sectors in the mall remained stable.
Outlook
The Ministry of Trade and Industry (“MTI”) announced on 13 August 2019 that the GDP growth forecast for 2019 has been downgraded to “0.0 to 1.0 per cent”, from “1.5 to 2.5 per cent”, with growth expected to come in at around the mid-point of the forecast range, due to weakened global economic growth outlook, increased uncertainties and downside risks exacerbated by US-China trade conflict among other macroeconomic challenges. The Department of Statistics reported that retail sales in August 2019 (excluding motor vehicles) was 1.1% lower year-on-year but 2.2% higher month-on-month.
FCT completed the acquisition of an additional 6â…”% interest in Waterway Point on 18 September 2019 to bring its total stake in the mall to 40.0%. Separately, FCT’s stake in PGIM ARF has increased to approximately 24.82% from 21.13%, subsequent to the investors’ shares redemption in the capital of PGIM ARF on 30 September 2019. These investments are expected to further increase income diversification for FCT’s portfolio.
FCT’s property portfolio consists of seven quality suburban retail properties in Singapore, i.e., Causeway Point, Northpoint City North Wing and Yishun 10 Retail Podium, Anchorpoint, YewTee Point, Bedok Point, Changi City Point and Waterway Point (40%-interest). These properties are located in populous residential precincts and they are well-connected to the public transportation system. The focus on necessity shopping, healthy mall occupancy and steady shopper traffic helps to underpin the stable performance and resilience of the portfolio.
1 As at 30 September 2019 for 4Q19 and 30 September 2018 for 4Q18.
2 Refers to financial Reporting Standards (FRS) 116 and 109 accounting adjustments which are non-cash and do not affect distributable income.
3 Includes pro-rated net distribution of $2.012 million attributed to FCT’s shareholding in PGIM ARF and (post one-off tax) distribution of $2.38 million attributed to its shareholding in Sapphire Star Trust.
4 The gearing of 32.9% includes FCT’s proportional share of assets and underlying borrowings in Sapphire Star Trust.
5 Relating to FRS 116 adjustment arising from amortisation of rent incentives.