The next REIT in line to report its results is Frasers Centrepoint Trust (SGX: J69U), or FCT.
The retail REIT went through an interesting growth phase where the manager acquired an additional 24.5% stake in NEX Mall in Serangoon back in January this year.
A month later, FCT was added to the bellwether Straits Times Index (SGX: ^STI).
The suburban retail REIT recently announced its financial results for the first half of fiscal 2024 (1H FY2024) ending 31 March 2024.
Here are five highlights from its latest earnings report.
A resilient financial performance
Gross revenue for 1H FY2024 fell by 7.2% year on year to S$172.2 million, principally due to the absence of contributions from Changi City Point and Tampines 1.
Changi City Point was divested back in August 2023 while Tampines 1 Mall is undergoing an asset enhancement initiative (AEI).
Net property income (NPI) tumbled by 8.4% year on year to S$124.6 million as property expenses dipped by just 4.1% year on year.
As a result, FCT’s distribution per unit (DPU) slipped by 1.8% year on year to S$0.06022.
The annualised DPU came up to S$0.12044 for FCT, translating into a forward distribution yield of around 5.5%.
However, if both malls were excluded from the computation, gross revenue and NPI would have risen by 2.9% and 2.1% year on year, respectively.
A slightly lower cost of debt
FCT’s aggregate leverage stood at 38.5% as of 31 March 2024, slightly above the 37.2% just three months ago.
There is a silver lining, though.
The REIT’s average all-in cost of debt dipped from 4.3% to 4.2% over this period.
In addition, the proportion of fixed-rate debt also increased from 63.4% to 68.5%, showcasing the manager’s continuous efforts to mitigate the higher interest rate environment.
All of the REIT’s debt for FY2024 has been refinanced, leaving it with no refinancing risk for the current fiscal year.
Around 16% of the REIT’s loans will come due in FY2025.
Robust operating metrics
Excluding Tampines 1, FCT reported a committed occupancy of 99.9%, similar to the previous quarter.
Rental reversion has also improved to 7.5% for 1H FY2024, higher than the 4.3% positive rental reversion logged in the prior year.
These metrics point to sustained and strong demand for FCT’s retail spaces.
Meanwhile, there is also low new retail supply risk which will support the continued rise in prime retail rents.
Continued rise in footfall and tenant sales
In line with the high occupancy and strong positive rental reversions, FCT continued to see a rise in both footfall and tenant sales.
For the second quarter of FY2024, shopper traffic increased by 8.1% year on year while tenant sales increased by 4.3% year on year.
The better performance was driven by pre-festive shopping along with recently revamped anchor tenants such as supermarkets and food courts.
Some of these new and refreshed tenancies include Fairprice Finest at Century Square, Cocoro Kobe Japan at Tiong Bahru Plaza, and Xiang Xiang Hunan Cuisine at NEX Mall.
Tampines 1 AEI progressing well
Elsewhere, FCT’s Tampines 1 AEI is progressing well with more than 99% leasing commitment to date based on the net lettable area of leases signed and under advanced negotiations.
Works are expected to be complete by September this year.
The mall continues to operate as work carries on with the REIT manager organising a string of events and promotions to continue drawing shoppers to the mall.
Some food and beverage crowd favourites that will return to Tampines 1 include Pepper Lunch, Dian Xiao Er and Sushi Tei.
The mall will also introduce store concepts that are exclusive such as the first Lenskart Studio concept in Asia and Novela’s Scented Journals (European perfumes).
Get Smart: A resilient performance with more to come
FCT saw a slightly weaker performance because of the divestment of Changi City Point and the ongoing AEI at Tampines 1.
Despite these, DPU remained resilient, posting just a small year-on-year dip.
With more contributions to come from NEX Mall and the AEI to be completed at Tampines 1 in due course, REIT investors could be looking at better days ahead.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
