Letter to Unitholders


Dear Unitholders

We are pleased to present Frasers Centrepoint Trust (“FCT” and the “Trust”)’s Annual Report and Sustainability Report for the financial year ended 30 September 2020 (“FY2020”).

Tenacity and Agility Amid Covid-19 Uncertainties

The scale and extent of impact from COVID-19 have left deep scars on our economy and nation. The retail sector is undoubtedly one of the hardest- hit sectors of the economy, especially during the Circuit Breaker period. Many businesses, except those in the essential trades, were ordered to shut; F&B outlets were only allowed to do takeaways and delivery orders; and strict safe distancing and crowd control measures were enforced. Within FCT’s portfolio, only between 30% and 40% of the tenants stayed open during this period.

FCT, together with its sponsor, Frasers Property Limited, rolled out two tenant support packages in February and March 2020 to help tenants cope with operation and cashflow challenges. However, the unprecedented scale and extent of impact from the subsequent Circuit Breaker measures necessitated far more substantial assistance for the tenants through the provision of a total of four months of rental rebates. Half of the rebates, amounting to two months of rent, was provided by the landlords, while the remaining half was supported by the Singapore government through property tax rebates and cash grants. Apart from aiding tenants with rental rebates, FCT is actively working with tenants on a targeted approach to help them get back on track as the situation continues to improve.

On the ground, our frontline colleagues in the essential services such as mall management, security, customer service and hygiene maintenance, continue to work tirelessly under tremendous pressure to keep everybody safe while ensuring strict compliance with safe-distancing control measures. Together, we have emerged stronger, having been through unprecedented times battling stress and disruption during the Circuit Breaker and into the phased re-opening of the economy. We are thankful to all our colleagues and stakeholders, for their tenacity and their agility in times of uncertainty.

Notwithstanding the COVID-19 challenges, our team remained steadfast in following through on FCT’s long-term growth strategy, completing a remarkable series of transactions that amounted to the closure of deals exceeding one billion Singapore dollars, all while working from home. In July 2020, FCT completed the acquisition of a 12.1% stake in ARF for S$197.2 million to raise its stake in ARF to 36.9%. FCT subsequently announced on 3 September 2020 to acquire the remaining 63.1% stake in ARF for S$1.06 billion (“ARF Acquisition”) and an Equity Fund Raising (“EFR”) to raise equity to, inter alia, fund the ARF Acquisition. The EFR raised about S$1.33 billion in gross proceeds, the largest amount raised for a secondary offering in the S-REIT space. In connection with the ARF Acquisition, an extraordinary general meeting was convened on 28 September 2020 with all tabled resolutions duly approved by unitholders. FCT’s full ownership of the ARF portfolio marks the completion of a journey that started in February 2019, with the acquisition of an initial 17.1% stake in ARF by FCT and 17.8% stake by Frasers Property Limited.


Financial performance mainly impacted by landlord’s rental rebates

FCT’s financial performance in FY2020 was significantly impacted by rental rebates assistance granted to tenants in the second half of FY2020. These rebates were part of the tenant support packages rolled out by FCT and its sponsor, Frasers Property Limited, to help tenants cope with COVID-19 challenges. This is in addition to the various property tax rebates and cash grants which FCT has passed through to all eligible tenants.

Revenue for FY2020 fell 16.3% year-on-year (“y-o-y”) to S$164.4 million and net property income fell 20.4% y-o-y to S$110.9 million, mainly due to the impact from S$27.4 million in rental rebates provided to tenants. Excluding this impact, the y-o-y decline in revenue and net property income would have been more benign at 2.4% and 0.7%, respectively.

The distribution to unitholders for the full year was S$101.1 million, 15.5% lower y-o-y. The decline in 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”)1.

Distribution per Unit for the full year was 9.042 S cents, which is 25.1% lower than the previous year.

FCT has fulfilled all the mandatory obligations in rental rebates. While it is still extending rental help for tenants who are unable to resume business, such as family karaokes and travel agencies, these tenants currently account for less than 1% of FCT’s net lettable area. Help is also extended to other tenants on a targeted basis, and in varied channels such as online marketing on Frasers’ online retail platforms – the digital food and beverage concierge app Makan Master and the Frasers e-Store which will be launched soon.

FCT’s financial position remains healthy

FCT’s financial position remains healthy with a gearing level of 35.9%2 as at 30 September 2020. Total borrowings stood at S$1,255 million and average cost of borrowings at 2.4%. The pro forma gearing of the enlarged FCT portfolio post the ARF Acquisition is approximately 39.3% and the aggregate borrowing is approximately S$2.4 billion with slightly lower average cost of borrowing of about 2.3%.

Despite the COVID-19 situation, FCT maintains healthy liquidity through successful debt financing including raising S$200 million in bonds in May 2020 and various tranches of revolving credit facilities. FCT also remains compliant with its financial covenants.

Valuation of portfolio properties remains stable

The valuation of FCT’s portfolio remains stable. The portfolio appraised value as at 30 September 2020 stood at S$2,857 million, compared with S$2,846 million a year ago. Apart from the properties Changi City Point, Anchorpoint and Yishun 10 which recorded declines in appraised values, the valuation of the remaining larger properties held steady. Bedok Point, which was earmarked for divestment subsequent to 30 September 2020, registered a S$14 million gain in appraised value, based on the divestment price of the property3.

Resilient operating performance

The operating performance of FCT’s portfolio remains resilient despite the mandatory COVID-19 safe distancing and control measures. Portfolio occupancy4 as at 30 September 2020 held steady at 94.9%, a slight decline from 96.5% a year ago. Since the start of Phase 2 of re-opening on 19 June 2020, all retailers have resumed business, with the exception of a few businesses such as family karaokes and travel agencies. Portfolio tenants’ sales have recovered to near pre-COVID-19 level since Phase 2 re-opening, but the recovery rate is uneven among various trade sectors and tenants. Portfolio shopper traffic has remained relatively stable at 60% to 70% of pre-COVID-19 level. Easing of safe distancing measures in Phase 3 re-opening will likely support further recovery of shopper traffic and tenant sales.

Well-spread lease expiry

FCT has a well-spread portfolio lease expiry profile with low concentration risk. FCT has about 32% of its leases (by rental income) expiring in FY2021, of which one-fifth of the renewals have been renewed or committed. This leaves about 26% of the expiring leases to be renewed in FY2021.

In the near-term, FCT expects pressure on asking rents for new and renewal leases, taking into account market uncertainties, the uneven pace of recovery among the retail trade sectors, continuation of certain COVID-19 control measures and weak economic outlook, amongst others. This may in turn impact occupancy.

As such, we are adopting differentiated approaches in our lease negotiations. This could include concessionary rent rate for a specific period before returning back to market rate in the subsequent period. We are also offering short- term lease extensions to allow tenants more time to assess their situation before committing to a new lease. These approaches will in turn, allow FCT as a landlord to gain clarity on Singapore’s phased re-opening and to price its rents accordingly.

Sustainability as an integral part of FCT’s strategy

The Board views sustainability as an integral part of FCT’s business strategy. As part of the Frasers Property Group (the “Group”), the management team works closely with the Group’s sustainability leadership and working teams to attain net zero carbon, achieve Green Mark certification for our properties, and improve the health and well-being of our people and stakeholders. Details are outlined in the Sustainability Report which is an integral part of this Annual Report.

FCT now one of Singapore’s largest suburban mall owners and top-10 S-REITs by market capitalisation

FCT is now one of the largest suburban retail mall owners in Singapore. FCT is also among the top 10 largest S-REITs by total and free float market capitalisation.

We believe in the defensiveness of the suburban retail sector which will remain resilient and relevant to our shoppers, in particular dominant malls well-located in dense residential catchment areas, near transportation nodes and focused on essential goods and services. Our enlarged portfolio comprises substantially malls with such characteristics.

With the enlarged portfolio of 11 suburban malls after the ARF Acquisition, FCT has more than 2.3 million square feet of net lettable space, more than 1,500 retail leases, 800,000 Frasers Experience (“FRx”) members and a catchment population of 3 million. 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.

Omnichannel, the future of retail

Frasers Property Retail as a group (the “FPR Group”), has recently introduced a feature to provide aggregated delivery from multiple store orders on the enhanced version of its food ordering app called the Frasers Makan Master. This feature enables consumers to combine orders from several F&B stores within the same mall in one delivery, thus saving delivery time and fees for the consumers.

The FPR Group will also launch the Fraser e-Store, an omnichannel store-to-door service for our tenants. This platform helps our tenants to get on the omnichannel retail bandwagon, providing insights on consumer preferences and behaviour for tenants to better meet consumer needs through adapting their products and service offerings. This is particularly useful for small and medium enterprise (“SME”) retailers who find it costly and difficult to invest in such infrastructure without economies of scale.

The new omnichannel platforms in the enhanced Makan Master and the Frasers e-Store, together with the scale of our portfolio of physical malls and the 800,000-strong FRx membership base form a strong combination of physical and digital retail offerings that will strengthen the resilience of our malls and its relevance to our tenants and consumers.

Staying agile in the new normal

The post-COVID-19 “new normal” requires us to stay agile and flexible amid fast changing consumer trends. We also need closer collaboration with our tenants, to plan ahead and address challenges proactively in order to infuse resilience in our partnerships. A strong and sustainable relationship with our tenants and their businesses is a key success factor of our business.

We believe we have the agility and tenacity to think ahead as an individual, as a team and as a business, to thrive and succeed in delivering long-term returns and value for the Trust and our unitholders.

Keeping an eye on future growth

While the immediate focus of the management team is to improve the operations and financial performance of the enlarged portfolio, we will continue to explore and evaluate acquisition opportunities that are yield-accretive, strengthen FCT’s business fundamentals and enhance its growth prospects. Potential opportunities include Northpoint City South Wing, which is owned by Frasers Property and the TCC Group, as well as opportunities from third party owners looking to divest their retail assets. At the same time, FCT will also continue to evaluate opportunities to re-constitute its portfolio, including the divestment of certain properties, to optimise its return objectives for the Trust and our unitholders.


In closing, we thank our board members for their stewardship and advice, the management and staff for their commitment and hard work despite the challenges amid the COVID-19, our Unitholders for their continued support for the EFR and confidence in FCT, and all our business partners, tenants and shoppers for their continued support.

Dr Cheong Choong Kong

Richard Ng
Chief Executive Officer

  1. FCT owns 40.0% of SST which holds Waterway Point.
  2. In accordance with Property Funds Appendix, the gearing ratio included FCT’s proportionate share of deposited property value and borrowings in SST.
  3. 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. The divestment of Bedok Point was completed on 9 November 2020.
  4. Includes Waterway Point

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