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 2019 ("FY2019").

Strong FY2019 results, thirteenth consecutive year of DPU growth

FCT delivered a strong set of results in FY2019 underpinned by improved performance across its portfolio properties, higher appraised valuation of its portfolio and maiden contributions from investments in associates made during the year.

Gross revenue rose 1.6% year-on-year to S$196.4 million and net property income ("NPI") was up 1.5% to S$139.3 million. Excluding non-cash accounting adjustments1, the revenue and NPI year-on-year growth were higher at 2.4% and 2.7%, respectively. The growth was achieved on improved portfolio occupancy, higher rental income from step-up rent increases and, improved performance led by Northpoint City North Wing and Changi City Point.

Overall property expenses increased 1.7% to S$57.1 million, due mainly to higher property tax expenses from Northpoint City North Wing and marketing expenses, but partially offset by lower professional fees.

Total distributable income for FY2019 was up 6.6% to S$118.7 million, driven by maiden contributions from FCT's investments in associates PGIM Real Estate AsiaRetail Fund ("PGIM ARF"), and in Sapphire Star Trust ("SST") which holds the interests in Waterway Point. Including the full distribution of retained cash from previous years, total distribution to unitholders for FY2019 was S$119.6 million, up 7.5% from FY2018. Distribution per Unit (the "DPU") for FY2019 was 12.07 cents and it is the thirteenth consecutive year of DPU growth since FCT's inception.

Total assets as at 30 September 2019 stood at S$3,611 million, up 27% from S$2,840 million a year ago. The increase was attributed to the new investments in PGIM ARF and SST as well as the increase in the appraised value of FCT property portfolio. Net asset value per unit rose 6.3% from S$2.08 to S$2.21.

FCT’s consistent performance and stable growth through economic cycles underscored the resilience of its portfolio of suburban retail properties, and our focus to deliver stable returns and long-term growth to our Unitholders.

Solid financial position amidst market volatilities

FCT’s financial position remains solid with gearing level at 32.9%2 as at 30 September 2019, which is lower than the average of about 35%3 in the REIT industry. The all-in average cost of borrowings remained unchanged at 2.6%. The U.S. Federal Reserve cut interest rates in October for the third time in 2019, and Singapore interest rates declined in tandem. The 3-month Singapore swap offer rate (SOR), which is commonly used to price commercial loans, reached 1.46% on 1 November, down from this year’s high of 2% in March4. The benign interest rate outlook should mitigate some concerns on the increase in borrowing costs going forward. Notwithstanding FCT’s strong financial position, we remain prudent in our capital and risk management, and stay vigilant amidst market volatilities.

Steady and healthy portfolio performance despite sluggish retail market

The Singapore’s Retail Sales Index excluding motor vehicle sales (the “RSI ex-motor”) since January this year has been weaker than the same period last year5, as the cautious economic outlook weighed on consumer sentiments, particularly for trade sectors relating to discretionary spending such as Furniture & Household Equipment, Telecommunications Apparatus & Computers and Watches & Jewellery6.

Despite the sluggish retail market in Singapore, FCT’s portfolio of suburban malls continues to deliver steady and healthy performance. The portfolio occupancy improved from 94.7% to 96.5% as new tenants took up more space at Northpoint City North Wing, Changi City Point, Bedok Point and YewTee Point. Causeway Point and Anchorpoint, however, registered lower occupancy, the former due to ongoing asset enhancement works and the latter to transitionary vacancy arising from tenant changeover. Total shopper traffic rose 9.6% to reach 118.1 million. Northpoint City, which comprises the North Wing owned by FCT and the South Wing owned by FCT’s sponsor Frasers Property Limited, saw 16% increase in shopper traffic compared with last year. Causeway Point, Changi City Point and YewTee Point registered year-on-year shopper traffic increases of 3.9%, 4.5% and 7.4%, respectively, while the smaller malls Anchorpoint and Bedok Point saw flat growth.

The average rental reversion for the portfolio7 of 4.5% was better than the 3.2% achieved the year before. Portfolio tenants’ sales per square foot remained steady compared with last year and average occupancy cost of 17.0% was slightly higher than 16.6% in FY2018.

Stable shopper catchment, strong focus on non-discretionary spending and shopper experience, as well as connectivity to public transport continue to underpin our portfolio’s resilience and stable performance.

Investments in PGIM ARF and Waterway Point expand FCT’s market share, set stage for future growth

During the year, FCT invested approximately S$910 million, the largest amount in its history, to acquire significant stakes in PGIM ARF and Waterway Point. These acquisitions are aligned to FCT’s investment strategy to increase market share in the suburban retail sector, expand and diversify income base and enhance total returns to Unitholders.

FCT acquired the initial 18.8% stake in PGIM ARF over two tranches for approximately S$380 million in April. The stake was subsequently raised to 24.8% following shareholder redemptions at PGIM ARF. Frasers Property Limited holds a separate 63.1% stake in PGIM ARF8.

FCT announced on 16 May 2019 the acquisition of a 33⅓% share in SST, the private trust that holds the interest in Waterway Point, from Frasers Property Limited for a total outlay of approximately S$440 million. The stake in SST was subsequently increased to 40.0% after FCT acquired an additional 62/3% for approximately S$89.6 million in September 2019 from one of the joint venture shareholders of SST.

The acquisitions in PGIM ARF and Waterway Point were financed by a combination of bank borrowings and gross proceeds from the Equity Fund Raising (the “EFR”) which was launched in May 2019. The EFR saw strong support from investors and raised gross proceeds of S$437.4 million via a private placement and a non-renounceable preferential offering completed on 17 May 2019 and 10 June 2019, respectively.

The acquisitions in PGIM ARF and in Waterway Point are strategic investments that fortify FCT as a leading player in the Singapore suburban retail sector. They also play a pivotal role in driving FCT’s future growth. FCT now has a very strong pipeline of retail assets in Singapore to set the stage for an exciting phase of growth.

Strong total unitholders’ return; inclusion in EPRA/NAREIT index a milestone

FCT has delivered a strong total return that outperformed the benchmark indices FTSE REIT Index and the FTSE Straits Times Index. Total return of FCT during the review period from 1 October 2018 to 30 September 2019 was 27.2%9, higher than the total return of 21.8% for FTSE REIT Index and -0.5% for the FTSE Straits Times Index. Over 3- and 5-year periods, FCT registered total returns of 46.6% and 92.0%, respectively, outperforming both the FTSE REIT and the FTSE Straits Times indices.

FCT’s market capitalisation on 30 September 2019 of S$3.06 billion was a 45.7% year-on-year increase, the result of strong price appreciation and increase in total issued units following completion of the EFR.

Another milestone during the year was the inclusion of FCT as a constituent in the FTSE EPRA/NAREIT Global Real Estate Index Series (Global Developed Index), from 23 September 2019. This index is a leading global benchmark index for real estate investors and inclusion in the index is a major step forward in extending FCT’s outreach to global investors, raising its profile in global investment markets.

Doing more for sustainability

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 work towards carbon neutrality, achieve Green Mark certification for our properties, and improve the health and wellbeing of our people and stakeholders. Details are outlined in the Sustainability Report which is an integral part of this Annual Report.

Going forward

The Singapore economy continues to face headwinds as global trade growth moderated further during the year amidst trade tensions between the U.S. and China and increased uncertainties from geopolitical instabilities. The Ministry of Trade and Industry Singapore expects the Singapore economy to grow by 0.5 per cent to 1 per cent in 2019 and 0.5 per cent to 2.5 per cent in 202010.

We remain attentive to these external events and their likely impact on capital markets, our business and sources of funding, and we will take appropriate actions where necessary. We believe FCT’s underlying business is resilient and its strong financial position will help ensure steady returns to our Unitholders and stakeholders.

For the next few years, we will continue to focus on improving performance and growing our portfolio. Our focus continues to be on Singapore and its suburban retail sector.


Dr Chew Tuan Chiong retired as CEO and Executive Director of FCAM on 1 July 2019. Tuan Chiong led FCT through a decade of acquisitions and asset enhancement initiatives which saw the Trust’s assets grow 86% from S$1.52 billion in 2010 to S$2.84 billion, and its market capitalisation double to over S$2 billion, a remarkable journey that has been delivering DPUs ever higher every year since inception. On behalf of the Board of Directors, we express our thanks and appreciation to Tuan Chiong for his leadership, dedication and contributions to FCT. The Board wishes him all the best in his future endeavours.

In closing, we thank our Board members for the stewardship and wisdom that have enabled the Trust to grow from strength to strength. We would also like to thank management and staff for their dedication and relentless hard work, and our Unitholders, business partners, tenants and shoppers for their continued support.

Dr Cheong Choong Kong

Richard Ng
Chief Executive Officer

  1. Refers to Financial Reporting Standards (FRS) 116 and 109 accounting adjustments which are non-cash and do not affect distributable income.
  2. In accordance with Property Funds Appendix, the gearing ratio included FCT’s proportional share of deposited property value and borrowings in SST.
  3. OCBC Investment Research, Weekly S-REITS Track, 11 November 2019.
  4. “Sibor begins long-awaited slide; slips to 1.8% after hovering at 1.9-2% the past 10 months”, The Business Times, 6 November 2019
  5. Monthly Retail Sales and Food Beverage Service Indices, November 2019, Department of Statistics, Singapore. https://www.singstat.gov.sg/-/media/files/news/mrssep2019.pdf. Accessed: 12 November 2019
  6. MARKETVIEW Singapore Q3 2019, CBRE Research, CBRE Ltd
  7. Excluding Waterway Point for year-on-year comparability, as the stake in Waterway Point was acquired in FY2019.
  8. Frasers Property Limited’s and FCT’s stake in PGIM ARF were acquired in separate transactions.
  9. Source: Bloomberg. Total return includes the returns from price appreciation and distributions.
  10. “Worst may be over, with better propsects for economy in 2020”, The Straits Times, 22 November 2019

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