Frasers Centrepoint Trust 1H2024 Financial Results

Frasers Centrepoint Trust 1H2024 Financial Results

Frasers Centrepoint Trust 1H2024 Key Highlights

On 25th April 2024, Frasers Centrepoint Trust released their 1H2024 financial results. The manager shared that Frasers Centrepoint Trust achieved a healthy set of results for 1H24 on the back of robust operating performance. Despite the positive news, Distribution Per Unit (DPU) declined year-on-year by 1.8% to 6.022 cents. What has caused the decline in DPU? Frasers Centrepoint Trust share price closed at S$2.11 on 3rd May. Is it a good time to buy?

Frasers Centrepoint Trust 1H2024 Portfolio

At this point of writing, Frasers Centrepoint Trust’s portfolio comprises of 9 retail malls and 1 office property. They are 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 (effective 50.0% interest), White Sands and an office property (Central Plaza).

Now, let us dive deeper into Frasers Centrepoint Trust’s latest financial results to find out how it has performed.

Frasers Centrepoint Trust 1H2024 Financial Results

In 1H2024, Frasers Centrepoint Trust’s Gross Revenue and Net Property Income (NPI) were lower year-on-year due to lower contribution from Changi City Point which was divested in October 2023. The other cause for the decline was because of the Asset Enhancement Initiative (AEI) works that is ongoing at Tampines 1. If we exclude both of these malls, the Gross Revenue and NPI would be higher at 2.9% and 2.1% respectively.

The distribution in 1H2024 included $1.1 million of its tax-exempt income available for distribution to Unitholders which had been previously retained in 2H23 while the distribution in 1H2023 included $1.7 million of its tax-exempt income available for distribution to Unitholders which had been previously retained in the 2H22 and retained $3.0 million of its tax-exempt income
available for distribution to Unitholders.

What has caused the decline in DPU? In conclusion, it is not an apple-to-apple comparison for the DPU in 1H2024 and 1H2023 because of the difference in amount of the retained income.

1H2024
(S$’000)
1H2023
(S$’000)
Change (%)
Gross Revenue172,212185,660(7.2)
Net Property Income124,612136,031(8.4)
Property expenses
(47,600) (49,629)4.1
Amount Distributable To Unitholders104,906104,6790.2%
Distribution Per Unit (“DPU”) (cents)6.0226.130(1.8%)

Frasers Centrepoint Trust 1H2024 Debt

Frasers Centrepoint Trust 1H2024 Debt

With the repayment of debts after divesting Changi City Point, Frasers Centrepoint Trust’s aggregate leverage remained healthy at 38.5%. No refinancing is required in FY24.

Average Debt to Maturity remained short at 3.05 years. This reflects the average time remaining until Frasers Centrepoint Trust’s outstanding debt matures. A longer average maturity can provide Frasers Centrepoint Trust with more flexibility to navigate interest rate changes and refinancing needs.

68.5% of its debt are hedged at fixed interest rates to mitigate against sudden rate hikes.

Frasers Centrepoint Trust 1H2024 Occupancy

Frasers Centrepoint Trust 1H2024 Occupancy

Frasers Centrepoint Trust’s portfolio comprises of 9 retail malls. As you can see above, Frasers Centrepoint Trust’s overall retail occupancy remained high at 99.9%. The retail portfolio achieved 7.5% rental reversion for 1H24 on the back of healthy leasing traction, which is higher than the 4.3% achieved for 1H23.

Frasers Centrepoint Trust Lease Expiry

Frasers Centrepoint Trust 1H2024 Lease Expiry

As you can see above, Frasers Centrepoint Trust’s Weighted Average Lease Expiry (WALE) stood short at 1.96 years in terms of Net Lettable Area (NLA). WALE is a metric used in real estate investment to measure the average lease duration of multiple tenants within a property portfolio.

REITs with longer WALEs face less risk of vacancy but the downside is the limit of rent hikes due to commitments from large tenants.

Overall, Frasers Centrepoint Trust’s lease expiries are well-spread.

Frasers Centrepoint Trust Current Dividend Yield

Frasers Centrepoint Trust Share Price 3-May-2024

What is Frasers Centrepoint Trust dividend yield? Based on Frasers Centrepoint Trust share price of S$2.11 and FY23 full year distribution of 12.150 cents, the current dividend yield is 5.76%. In my opinion, I think the current dividend yield is decent but any percentage above 6% will be greater.

Summary of Frasers Centrepoint Trust 1H2024 Financial Results

As usual, we have come to the last section where I summarize the pros and cons based on Frasers Centrepoint Trust’s latest results.

The pros are:

  • Aggregate leverage remained healthy at 38.5%.
  • No refinancing is required in FY24.
  • 68.5% of its debt are hedged at fixed interest rates to mitigate against sudden rate hikes.
  • Overall retail occupancy remained high at 99.9%.
  • Retail portfolio achieved 7.5% rental reversion for 1H24.
  • Frasers Centrepoint Trust’s lease expiries are well-spread.
  • Current dividend yield is 5.76% based on closing price of S$2.11.

The cons are:

  • Frasers Centrepoint Trust’s Gross Revenue and Net Property Income (NPI) declined year-on-year at 7.2% and 8.4% respectively because of Changi City Point and Tampines 1.
  • Distribution Per Unit (DPU) declined year-on-year by 1.8% to 6.022 cents.
  • Average Debt to Maturity remained short at 3.05 years.

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