• FY2020 financial performance impacted mainly by rental rebates dispensed in 2H20 to help tenants cope with challenges arising from COVID-19
• Excluding the impact from the rental relief, FY2020 revenue and NPI would have decreased 2.4% and 0.7% year-on-year, respectively
• Portfolio total tenants’ sales recovered to near pre-COVID-19 level and shopper traffic stabilised at 60% to 70% of pre-COVID level

SINGAPORE, 3 NOVEMBER 2020

Frasers Centrepoint Asset Management Ltd. (“FCAM” or the “Manager”), the manager of Frasers Centrepoint Trust (“FCT” or the “Trust”), reported distribution per unit (“DPU”) of 4.372 Singapore cents for the period from 1 April 2020 to 30 September 2020 (“2H20”), 26.1% lower year-on-year (“y-o-y”). This brings the total DPU for the financial year ended 30 September 2020 (“FY2020”) to 9.042 cents, 25.1% lower compared with the previous year.

Unitholders as of record date on 6 October 2020 can expect to receive their DPU for 2H20 on 4 December 2020.

Mr Richard Ng, Chief Executive Officer of FCAM, said, “The COVID-19 pandemic has hit the retail sector hard, particularly in the second half of FY2020. We have been working with our tenants in various ways to support them through this difficult period, including the provision of rental rebates which impacted the financial performance in 2H20 and for the full year. Portfolio operating performance has remained resilient with portfolio occupancy holding steady at 94.9%.

Notwithstanding the challenging environment, we announced on 3 September 2020 the acquisition of the remaining 63.11% stake in AsiaRetail Fund Limited (the ”ARF”, and the acquisition, the “ARF Acquisition”) for S$1.06 billion and on 28 September 2020, an equity fund raising (the “EFR”) to raise gross proceeds of approximately S$1.33 billion to, inter alia, finance the ARF Acquisition and to pare down debts.

The ARF Acquisition is transformative for FCT. It elevates FCT to one of the largest suburban retail mall owners in Singapore, and enhances its competitive advantages through scale and offerings which are critical for FCT to stay resilient and relevant in the “new normal” post COVID-19. Following the EFR, FCT is among the top-10 largest Singapore REITS by market capitalisation. This raises FCT’s profile among global investors and its representation in key benchmark indices, which improves FCT’s competitiveness in the capital markets.”

Summary of 2H20 and FY2020 results

Lower financial performance due mainly to the provision of rental rebates

Performance in 2H20 was significantly impacted by the rental rebates provided to tenants. The total quantum of rental rebates provided was S$27.35 million. Revenue in 2H20 declined 33.8% y-o-y to S$64.46 million and net property income in 2H20 was down 42.8% y-o-y to S$38.61 million. This, in turn led to a 16.3% y-o-y decline in full year revenue to S$164.38 million and a 20.4% y-o-y decline in full year net property income to S$110.89 million.

Distribution to unitholders in 2H20 was S$48.94 million, down 21.7% y-o-y. The decline in 2H20 distribution was partially offset by the release of the retained distribution of S$18.0 million from 1H20 and the full year contributions of dividend received from FCT’s investments in ARF and Sapphire Star Trust (“SST”)². The distribution to unitholders for the full year was S$101.15 million, 15.5% lower y-o-y.

FCT’s financial position remains healthy

FCT’s financial position remains healthy with gearing level of 35.9%³ as at 30 September 2020. The all-in average cost of borrowing was 2.4%, compared with 2.6% in the previous year, due to the general decline in interest rates.

Total appraised value of FCT’s portfolio of investment properties as at 30 September 2020 stood at S$2,857 million, compared with S$2,846 million a year ago. The appraised values of Causeway Point, Northpoint City North Wing, Changi City Point, and YewTee Point were relatively stable compared to a year ago. The smaller properties Anchorpoint and Yishun 10 saw decline of 3.1% and 7.9% in their respective appraised value. Bedok Point registered a S$14 million or 14.9% gain in appraised value, based on the divestment price of the property announced on 3 September 20204. The appraised value of Waterway Point in which FCT has a 40% shareholding via a joint venture, remained unchanged at S$1,300 million⁵.

Operating performance remains resilient

The operating performance of FCT’s portfolio remains resilient despite the mandatory COVID-19 safe distancing and control measures. Portfolio occupancy⁶ held steady at 94.9% as at 30 September 2020, a slight improvement from 94.6% in the previous quarter but a decline from 96.5% a year ago.

A total of 235 leases accounting for 352,989 square feet or 24.3% of FCT’s portfolio net lettable area (“NLA”) were renewed in FY2020. A substantial portion of the renewals were completed in 1H20, prior to the “Circuit Breaker”. The average portfolio rental reversion for FY2020 was 4.2%. All retailers with the exception of a few such as family karaoke and travel agencies, have resumed businesses. Portfolio tenants’ sales have recovered to near pre-COVID-19 level since the re-opening of the economy in June 2020, but the recovery rate is uneven among trade sectors and tenants. Portfolio shopper traffic has remained relatively stable at 60% to 70% of pre-COVID-19 level.

Outlook

The Ministry of Trade and Industry (“MTI”) announced on 14 October 2020 that based on advanced estimates for the third quarter of 2020, the Singapore economy expanded 7.9% on a quarter-on-quarter seasonally-adjusted basis, rebounding from the 13.2% contraction in the preceding quarter. The improved performance of the Singapore economy in the third quarter came on the back of the phased re-opening of the economy following the Circuit Breaker that was implemented between 7 April 2020 and 1 June 2020. MTI had warned about continuing uncertainties over how the COVID-19 situation will evolve in the coming quarters, and correspondingly, the trajectory of the economic recovery in both the global and domestic economies.

MTI had, on 11 August 2020, projected Singapore’s GDP contraction in 2020 to be in the range of -7.0% to -5.0%⁷.

On retail sales, the Singapore Department of Statistics reported retail sales index (excluding motor vehicles) (“RSI ex auto”) for August 20208 at -8.4% year-on-year, and +0.1% month-on-month (seasonally adjusted). The RSI ex auto index continued to recover since May 2020, when it was -45.2% year-on-year.

FCT’s portfolio shopper traffic has recovered and remained stable at between 60% and 70% of pre- COVID-19 level in the months of July 2020 to September 2020, since the re-opening of the economy in June 2020. The portfolio total tenants’ sales have also recovered to near pre-COVID-19 level although there are variances across trades and tenants. Easing of safe distancing measures with Phase 3 re- opening would likely support further recovery of shopper traffic and tenant sales.

Post the completion of ARF Acquisition on 27 October 2020, FCT is now one of the largest suburban retail mall owners in Singapore with 11 suburban retail properties, an increase from seven previously.

The enlarged retail portfolio upon completion of the ARF acquisition provides FCT with significantly larger catchment population. This strengthens FCT’s ability to offer more options and value to retailers and shoppers. It also provides FCT with the scale to drive omnichannel retail strategies and to enhance the role of its malls as “last-mile” fulfilment hubs in their immediate residential catchment, as working-from- home becomes more prevalent. The Manager believes these factors will continue to underpin the long- term performance and resilience of FCT’s portfolio.

The Manager’s near-term focus is on managing the operating and financial performance of the enlarged property portfolio, taking into consideration the ongoing COVID-19 situation.

¹ As at 30 September 2020 for 2H20 and 30 September 2019 for 2H19.

² FCT owns 40.0% of Sapphire Star Trust which holds Waterway Point.

³ In accordance with Property Funds Appendix, the gearing ratio included FCT’s proportionate share of deposited property value and borrowings in SST.

⁴ Based on the sale price of Bedok Point in the proposed divestment of Bedok Point as announced on 3 September 2020. The sale price was arrived at after taking into account the independent valuations conducted by Jones Lang LaSalle Property Consultants Pte. Ltd.(“JLL”) (commissioned by HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of FCT)) and Colliers International Consultancy & Valuation (Singapore) Pte. Ltd. (“Colliers”) (commissioned by the Company). JLL, in its report dated 1 August 2020, had stated that the open market value of Bedok Point as at 1 August 2020 was S$108.9 million and Colliers, in its report dated 1 August 2020, had stated that the open market value of Bedok Point as at 1 August 2020 was S$107.2 million.

⁵ FCT owns 40.0% of Sapphire Star Trust which holds Waterway Point. S$1,300 million is the total value of the retail property and FCT’s 40.0% interest amounts to S$520 million.

⁶ Includes Waterway Point

⁷ “MTI Narrows 2020 GDP Growth Forecast to “-7.0 to -5.0 Per Cent””. Ministry of Trade and Industry, Singapore, Press Release, 11 August 2020. URL: https://www.mti.gov.sg/Newsroom/Press-Releases/2020/08/MTI-Narrows-2020-GDP-Growth-Forecast

⁸ Monthly Retail Sales Index and Food & Beverage Services Index. Singapore Department of Statistics, Press Release, 5 October 2020. URL: https://www.singstat.gov.sg/-/media/files/news/mrsaug2020.pdf

⁹ After the completion of the divestment of Bedok Point, which is expected to take place on 9 November 2020