• FCT retains 50% of distributable income to preserve financial flexibility in current times of uncertainty
• COVID-19 to have significant impact on FCT’s revenue, income available for distribution and cashflow for the remaining period of Financial Year 2020

SINGAPORE, 23 APRIL 2020

Frasers Centrepoint Asset Management Ltd. (“FCAM”), the manager of Frasers Centrepoint Trust (“FCT” or the “Trust”), reported distribution per unit (“DPU”) of 1.61 Singapore cents for the period from 1 January 2020 to 31 March 2020 (“2Q20”), 48.7% lower year-on-year (“y-o-y”), due to enlarged unitholders base and higher amount of distributable income retained during the quarter.

FCT Unitholders (the “Unitholders”) can expect to receive their DPU for 2Q20 on 29 May 2020. The Ex-Date is 30 April 2020 and the Books Closure Date is 4 May 2020.

Mr Richard Ng, Chief Executive Officer of FCAM, said, “The COVID-19 outbreak is unprecedented in its speed of transmission, severity and extent of its impact. This is a very challenging period for everyone. Our team has been working hard to ensure the safety and wellbeing of our tenants, shoppers, employees and all stakeholders.

Our tenants are experiencing tough trading conditions as shopper traffic and tenants’ sales at our properties have been severely affected due to the COVID-19 outbreak. FCT, together with Frasers Property Retail (the “Group”) rolled out our Tenant Support Package (“TSP”) on 26 February 2020¹ and a S$45 million enhancement to the TSP on 27 March 2020², to help our tenants meet immediate cashflow challenges and to provide rental relief and support over the next few months. We will continue to monitor the COVID-19 situation and take appropriate measures to help FCT navigate through this difficult period.”

Summary of 2Q20 results

Gross revenue remained stable, distributable income lifted by contributions from PGIM ARF and SST

Gross revenue for 2Q20 was S$50.2 million, up 0.9% y-o-y on gross rent increase from renewals and step up rents from existing leases. NPI for the quarter was S$36.0 million, down 1.3% y-o-y as growth in property expense outpaced revenue growth during the quarter.

Income available for distribution for 2Q20 rose 25.0% to S$36.0 million, due mainly to contributions from FCT’s 24.8% interest in PGIM ARF and 40.0% interest in SST. The distribution from PGIM ARF was S$6.0 million and the amount from SST was S$3.8 million. In view of the uncertainty brought about by the COVID- 19 situation, the Manager has adopted a prudent approach to retain approximately 50% of the income available for distribution this quarter to bring the distribution to Unitholders to S$18.0 million.

Gearing at 33.3%, cost of borrowings down to 2.44%

FCT’s gearing level stood at 37.4%⁵ as at 31 March 2020. The increase in the gearing from last quarter was due mainly to the drawdown of S$80 million from its revolving credit facility on 27 March 2020 to repay a S$90 million Medium Term Note (“MTN”) due on 3 April 2020. Post the repayment of the S$90 million MTN, the gearing is 33.3%.

The all-in cost of borrowing in 2Q20 was 2.44%, down from 2.57% in the previous quarter. The weighted average debt maturity was 2.13 years and FCT has approximately 50% of its borrowings on fixed or hedged-to-fixed interest rates. FCT is in compliance with all its financial covenants.

Stable portfolio occupancy, lower shopper traffic and tenants’ sales due to COVID-19 impact

For the financial year-to-date period between 1 October 2019 and 31 March 2020 (“YTD”), a total of 142 leases accounting for 269,284 square feet or 18.5% of total portfolio net lettable area (“NLA”) were renewed. The YTD average portfolio rental reversion stood at 5.2%. All leases of anchor tenants due for renewal in FY2020 have been renewed and there are currently less than 12% of expiring leases by NLA in FY2020 remaining to be renewed.

The portfolio occupancy as at 31 March 2020 was 96.1%, stable compared with 96.0% a year ago but 1.2%-point lower compared with the previous quarter.

Overall portfolio shopper traffic in 2Q20 was down 2.4% y-o-y. The traffic registered positive y-o-y growth in January 2020 but registered sharp declines in February 2020 and March 2020 due to impact from COVID- 19. Tenants’ sales on per square foot basis for the period December 2019 to February 2020 was down 4.0% y-o-y, with steeper sales decline registered in February. Tenants’ sales at larger malls saw between 2% and 10% y-o-y decline while smaller malls saw mixed variances. The Manager expects tenants’ sales for the next few months to be lower than February 2020 due to further impact from COVID-19 and the “Circuit Breaker” measures which commenced on 7 April 2020, and which has now been extended to 1 June 2020.

Outlook

The COVID-19 outbreak, which was first reported in early 2020, has escalated rapidly over the last two months and inflicted significant impact on the economy both domestically and globally. In its most recent GDP growth forecast projection on 26 March 2020, the Ministry of Trade and Industry (“MTI”) downgraded its growth forecast for Singapore GDP to “-4.0 to -1.0 per cent” from “-0.5 to 1.5 per cent”⁶. Singapore Department of Statistics reported retail sales index (excluding motor vehicles) for February 2020 declined 10.2%, compared with February 2019.

The Government has announced various safe distancing measures, the “Circuit Breaker” measures and the stay home advisory in March 2020 and April 2020 to protect the public. The COVID-19 outbreak has significant detrimental impact to retail and F&B businesses. Under the “Circuit Breaker” period from 7 April 2020 to 4 May 2020 and which has now been extended till 1 June 2020, all “non-essential” trades are to be closed and certain F&B trades are permitted to accept only takeaway orders.

The “COVID-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) Regulations 2020” (the “Regulations”) provides tenants with relief from their contractual obligations for six months from the effective date of the Regulations, and this period may be extended to a year. The rental payments of affected tenants during this period could potentially be deferred.

The combination of the detriment from COVID-19, the regulatory measures aforementioned and the provision for rental rebates under the TSP will have significant impact on FCT’s revenue, income available for distribution and cashflow for the remaining period of Financial Year 2020.

The Manager will continue to proactively manage the operating and financial performance of the property portfolio in the best interests of FCT and its Unitholders, taking into consideration the impact from the developing COVID-19 situation.

¹ “Frasers Property Retail announces Tenant Support Package across 14 malls”, Press Release, 26 February 2020. Available at website: https://fct.frasersproperty.com/newsroom/20200226_122055_J69U_KJN98V8RV1UKKRCD.1.pdf

² “Frasers Property Retail and Frasers Centrepoint Trust To Provide Tenants With Additional S$45 Million In Rental Rebates”, Press Release, 27 March 2020. Available at website: https://fct.frasersproperty.com/newsroom/20200327_184515_J69U_QQSVM00WJGR6UCID.1.pdf

³ Includes dividends from PGIM Real Estate AsiaRetail Fund Limited (“PGIM ARF”): S$6.012 million and Sapphire Star Trust (“SST”): S$3.779 million (this amount excludes interest income of S$0.683 million from SST) (2Q19: nil).

⁴ As at 31 March 2020 for 2Q20 and 31 March 2019 for 2Q19.

⁵ In accordance with Property Funds Appendix, the gearing ratio included FCT’s proportionate share of deposited property value and borrowings in SST.

⁶ “Singapore’s GDP Contracted by 2.2 Per Cent in the First Quarter of 2020. MTI Downgrades 2020 GDP Growth Forecast to "-4.0 to -1.0 Per Cent", Ministry of Trade and Industry, Press Release, 26 March 2020. Available at website:

https://www.mti.gov.sg/Newsroom/Press-Releases/2020/03/Singapore-GDP-Contracted-by-2_2-Per-Cent-in-the-First-Quarter-of-2020