OCBC Investment Research Private Limited 29 April 2025
Frasers Centrepoint Trust (FCT) Delivers All-Rounded Performance: Solid Reversions and Lower Leverage Bolster BUY Rating
Frasers Centrepoint Trust (FCT) reported an encouraging performance for the first half of its financial year ending September 2025 (1HFY25), reinforcing its BUY rating with a fair value estimate raised to SGD 2.50 from SGD 2.45. The last closing price was SGD 2.25 as of 29 April 2025.
1HFY25 Financial Highlights: Steady Growth Amidst Challenges
FCT demonstrated resilience with its 1HFY25 results meeting expectations, forming 50.1% of the initial forecast.
Distribution Per Unit (DPU): DPU saw a slight increase of 0.5% year-on-year (YoY), reaching 6.054 Singapore cents.
Revenue and NPI: Gross revenue climbed 7.1% YoY to SGD 184.4 million, while Net Property Income (NPI) rose 7.3% YoY to SGD 133.7 million.
Influencing Factors: While distributions from investments surged by 83.2% and finance costs remained relatively stable (down 1.6%), the modest DPU growth was attributed to a larger proportion of management fees being taken in cash and provisions made concerning the cinema operator, Cathay Cineplexes.
Cathay Cineplexes Update: Initially owing approximately SGD 2.7 million in unpaid rents and other costs, Cathay Cineplexes has made partial payments and expressed intent to continue operating at two of FCT’s malls.
Operational Strength: Robust Leasing and High Occupancy
FCT’s operational metrics remained strong in 1HFY25.
Rental Reversions: Solid positive rental reversions of +9.0% were achieved for leases renewed during the period, covering 10% of the retail portfolio’s net lettable area (NLA). This uplift was broad-based across the portfolio.
Mall-Specific Reversions: Double-digit positive reversions were notably registered at Tampines 1 (+13.3%), Century Square (+11.6%), and Causeway Point (+10.0%).
Occupancy: Retail portfolio committed occupancy remained stable quarter-on-quarter (QoQ) at a high 99.5% (excluding Hougang Mall, currently undergoing Asset Enhancement Initiative – AEI). All retail malls maintained occupancy above 90%, with the exception of White Sands at 98.7%.
Shopper Traffic and Sales: Shopper traffic saw a modest increase of 1.0% YoY, while tenants’ sales grew by a healthier 3.3% YoY in 1HFY25.
Capital Management: Prudent Financial Position
FCT demonstrated effective capital management, strengthening its financial position.
Aggregate Leverage: The aggregate leverage ratio improved, declining to 38.6% from 39.3% as of 31 December 2024.
Debt Profile: FCT has no refinancing requirements for the remainder of FY25. The debt hedging ratio increased significantly from 65.5% in the previous quarter to 75.8%.
Cost of Debt: The average cost of debt decreased by 10 basis points to 3.9% (based on 1HFY25 average). The all-in average cost of debt for 2QFY25 was lower at 3.8%, suggesting potential stability around current levels.
Acquisition Financing: FCT secured debt funding for the proposed acquisition of Northpoint City South Wing at approximately 3.25%, lower than the underwriting assumption of 3.4%. Management still plans to finance a portion with perpetual securities (estimated cost around 4.2%), which have not yet been issued.
Forecast Adjustments: Due to lower interest cost assumptions, FY25 and FY26 DPU forecasts have been increased by 0.6% and 1.3%, respectively, leading to the revised fair value estimate of SGD 2.50.
Investment Thesis: Defensive Portfolio and Growth Potential
FCT’s investment thesis remains compelling despite recent DPU headwinds.
Historical Performance: FCT had a strong track record of annual DPU growth from its listing in July 2006 until FY19. This was interrupted in FY20 due to Covid-19 measures. A firm rebound occurred in FY21, followed by modest growth in FY22 (+1.2%). However, rising borrowing costs led to marginal DPU declines in FY23 (-0.6%) and FY24 (-0.9%).
Portfolio Resilience: The portfolio, predominantly comprising defensive suburban malls in Singapore, is well-positioned amid macroeconomic uncertainty due to dominant positions in their respective catchment areas.
Strategic Initiatives: Management’s capital recycling efforts enhance FCT’s capacity to pursue inorganic growth opportunities and Asset Enhancement Initiatives (AEI).
ESG Commitment and Recognition
FCT continues to advance its Environmental, Social, and Governance (ESG) initiatives.
Rating Upgrade: FCT’s ESG rating was upgraded in June 2024, driven by outperforming talent management practices, leading business ethics, and strong green building efforts compared to peers.
Green Initiatives: FCT is installing solar power panels across its properties and plans a network of 36 electric vehicle (EV) charging points across 12 Frasers malls. This aligns with its sponsor Frasers Property’s goal of achieving net-zero carbon by 2050.
Certifications and Ratings: All 10 FCT properties hold at least BCA Gold certification. FCT achieved the highest 5-Star rating in the 2024 GRESB Real Estate Assessment for the fourth consecutive year.
Potential Catalysts
Divestment of assets at prices exceeding valuations.
DPU-accretive acquisitions.
Stronger-than-anticipated momentum in mall footfall and tenants’ sales.
Investment Risks
A slowdown in macroeconomic conditions potentially dampening consumer sentiment.
A rising interest rate environment increasing borrowing costs.
A slowdown in portfolio rental reversions.
Valuation Analysis and Peer Comparison
The following table compares FCT’s valuation metrics against its peers based on estimates for FY25 and FY26:
Company Price/Earnings (FY25E/FY26E) Price/Book (FY25E/FY26E) EV/EBITDA (FY25E/FY26E) Dividend Yield (%) (FY25E/FY26E) ROE (%) (FY25E/FY26E)
FRASERS CENTREPOINT TRUST (FCRT.SI) 20.2 / 19.0 1.0 / 1.0 26.8 / 24.7 5.4 / 5.6 4.7 / 5.2
CAPITALAND INTEGRATED COMMERCIAL TRUST (CMLT.SI) 19.3 / 18.7 1.0 / 1.0 23.2 / 22.4 5.2 / 5.4 5.4 / 5.6
MAPLETREE PAN ASIA COMMERCIAL TRUST (MACT.SI) 14.8 / 14.5 0.3 / 0.3 18.7 / 18.9 6.8 / 7.0 4.7 / 4.8
STARHILL GLOBAL REAL ESTATE INVESTMENT TRUST (STHL.SI) 12.4 / 11.7 0.7 / 0.7 16.0 / 15.5 7.8 / 7.9 5.4 / 5.8
PARAGON REIT (PARA.SI) 21.2 / 18.8 1.0 / 1.0 21.0 / 19.9 4.6 / 5.1 5.0 / 5.4
Source: Refinitiv
Price/Book Chart (Chart data from source document showing P/B ratio from Apr-20 to Apr-25 with Avg, +/-1SD, +/-2SD lines)
Dividend Yield Chart (Chart data from source document showing Dividend Yield from Apr-20 to Apr-25 with Avg, +/-1SD, +/-2SD lines)
Company Overview (as of 30 September 2024)
Frasers Centrepoint Trust (FCT) is a premier developer-sponsored retail Real Estate Investment Trust (REIT) and ranks among Singapore’s largest suburban retail mall owners, with total assets valued at approximately SGD 7.1 billion.
FCT’s portfolio consists of nine retail malls and one office building, strategically located in Singapore’s suburban areas, close to residential hubs and transportation facilities. The properties include:
Causeway Point
Century Square
Hougang Mall
NEX (effective 50.0% interest)
Northpoint City North Wing (including Yishun 10 Retail Podium)
Tampines 1
Tiong Bahru Plaza
Waterway Point (50.0% interest)
White Sands
Central Plaza (office property)
The retail portfolio boasts approximately 2.7 million square feet of net lettable area, hosting over 1,700 leases. It maintains a strong focus on necessity spending, food & beverage outlets, and essential services, ensuring stable and recurring shopper footfall driven by commuter traffic and the surrounding residential population.
FCT is included in several major benchmark indices, such as the FTSE EPRA/NAREIT Global Real Estate Index Series (Global Developed Index), the Straits Times Index (STI), FTSE ST Real Estate Investment Trust Index, MSCI Singapore Small Cap Index, and the SGX iEdge S-REIT Leaders Index.
Listed on the Main Board of the Singapore Exchange Securities Trading Limited since 5 July 2006, FCT is managed by Frasers Centrepoint Asset Management Ltd., a wholly-owned subsidiary of Frasers Property Limited.
Historical Performance Trends
Distribution per unit (S cents) (Chart data from source document showing DPU from FY2018 to FY2024: 12.0, 12.1, 9.0, 12.1, 12.2, 12.2, 12.0)
Portfolio occupancy cost (Chart data from source document showing Occupancy Cost from FY2018 to FY2023: 17.0%, 19.2%, 17.5%, 16.2%, 15.6%, 16.0%)
Aggregate leverage ratio trend (Chart data from source document showing Leverage Ratio from FY2018 to FY2024: 28.6%, 32.9%, 35.9%, 33.3%, 33.0%, 39.3%, 38.5%)
Portfolio occupancy trend (Chart data from source document showing Occupancy Rate from FY2018 to FY2024: 94.7%, 96.5%, 94.9%, 97.3%, 97.5%, 99.7%, 99.7%)
Company Financials Snapshot (FY2020-FY2024)
Income Statement (In Millions of SGD except Per Share)
Item FY2020 FY2021 FY2022 FY2023 FY2024
Revenue 164.4 341.1 356.9 369.7 351.7
– Cost of Revenue 71.9 126.9 130.9 139.6 135.2
Gross Profit 92.5 214.2 226.0 230.2 216.5
+ Other Operating Income — — — — —
– Operating Expenses 3.2 28.3 7.2 6.8 20.7
Operating Income or Losses 89.2 185.9 218.8 223.3 195.8
– Interest Expense 27.6 45.9 44.4 78.3 80.8
– Foreign Exchange Losses (Gains) — — — — —
– Net Non-Operating Losses (Gains) -90.1 -32.3 -26.8 -67.1 -81.5
Pretax Income 151.8 172.2 201.2 212.2 196.5
– Income Tax Expense (Benefit) 0.1 3.6 -6.1 0.3 -1.1
Income Before XO Items 151.7 168.6 207.3 212.0 197.5
– Extraordinary Loss Net of Tax — — — — —
– Minority/Non Controlling Interests — — — — —
Net Income/Net Profit (Losses) 151.7 168.6 207.3 212.0 197.5
Net Inc Avail to Common Shareholders 151.7 168.6 207.3 212.0 197.5
Abnormal Losses (Gains) — — — — —
Tax Effect on Abnormal Items — — — — —
Normalized Income 155.5 194.0 208.0 212.2 206.7
Basic Earnings per Share 0.1 0.1 0.1 0.1 0.1
Basic Weighted Avg Shares (m) 1,125.4 1,670.2 1,701.5 1,706.4 1,775.9
Diluted EPS Before Abnormal Items 0.1 0.1 0.1 0.1 0.1
Diluted EPS Before XO Items 0.1 0.1 0.1 0.1 0.1
Diluted EPS 0.1 0.1 0.1 0.1 0.1
Diluted Weighted Avg Shares (m) 1,127.0 1,672.4 1,703.8 1,710.9 1,784.5
Profitability Ratios (%)
Ratio FY2020 FY2021 FY2022 FY2023 FY2024
Return on Common Equity 6.06 5.22 5.26 5.34 4.86
Return on Assets 4.05 3.45 3.50 3.44 3.10
Return on Capital 5.41 4.15 3.44 3.31 3.20
Return on Invested Capital 6.18 4.52 3.95 3.72 3.58
Operating Margin 37.49 41.03 48.87 39.24 32.69
Incremental Operating Margin 0.87 1.09 1.19 0.80 0.83
Pretax Margin 92.32 50.49 56.37 57.40 55.86
Income before XO Margin 92.27 49.43 58.07 57.33 56.16
Net Income Margin 92.27 49.43 58.07 57.33 56.16
Net Income to Common Margin 92.27 49.43 58.07 57.33 56.16
Effective Tax Rate 0.05 2.10 -3.03 0.12 -0.55
Dvd Payout Ratio 57.41 100.46 83.86 82.53 91.32
Sustainable Growth Rate 6.02 5.17 5.21 5.30 4.81
Credit Ratios
Ratio FY2020 FY2021 FY2022 FY2023 FY2024
Total Debt/EBIT 13.79 8.58 8.23 9.84 9.69
Net Debt/EBIT 13.48 8.38 8.06 9.70 9.56
EBIT to Interest Expense 3.29 4.59 4.95 2.85 2.59
Long-Term Debt/Total Assets 25.68 27.19 23.89 28.89 26.78
Net Debt/Equity 0.48 0.45 0.45 0.54 0.48
Source: Refinitiv
