On 22nd January 2025, Frasers Centrepoint Trust announced their 1QFY25 business updates. In the business update, the manager of Frasers Centrepoint Trust will only share Frasers Centrepoint Trust’s operational performance. There will be minor updates regarding debt and occupancy but there will be no updates on its financial performance. We will also look at its current dividend yield to determine whether the yield is attractive.
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).
Frasers Centrepoint Trust 1QFY25 Debt
As of 31st December 2024, Frasers Centrepoint Trust’s gearing (aggregate leverage) stood at 39.3%. In my opinion, the aggregate leverage is on the higher end whereby I wish its debt could be further parred down.
Gearing ratio is a financial metric used to assess the proportion of a company’s debt to its equity. It is calculated by dividing the company’s total debt by its total equity. A high gearing ratio indicates that the company has a significant amount of debt in relation to its equity, which may pose a higher risk but also potentially lead to higher returns.
On the other hand, a low gearing ratio suggests a more conservative financial structure with lower risk but potentially lower returns. Gearing ratio is an important measure for investors and creditors to evaluate a company’s financial health and risk level.
65.5% of Frasers Centrepoint Trust’s debt are hedged to fixed interest rates. This is to mitigate against sudden interest rate hikes. With the Fed cutting interest rates, the possibility of a sudden interest rate hike is low.
Based on the above chart, Frasers Centrepoint Trust’s debt maturity is well-spread with no debts due in FY25. Thus, investors do not need to worry about refinancing risk in FY25.
Frasers Centrepoint Trust 1QFY25 Occupancy
With the divestment of Changi City Point, Frasers Centrepoint Trust’s retail portfolio committed occupancy stood at 99.5%. I note that the manager had shared on the rejuvenation of Level 2 of Tiong Bahru Plaza, and this may improve its occupancy in subsequent quarters. The manager had also announced that Hougang Mall will be undergoing AEI (Asset Enhancement Initiative). Thus, I will be expecting the occupancy for Hougang Mall to dip slightly until the works are completed.
Asset Enhancement Initiative is a program designed to increase the value and performance of assets through various strategic methods. This initiative focuses on optimizing the utilization of assets, enhancing their functionality, and improving their overall effectiveness. By implementing this initiative, businesses can maximize the potential of their assets and achieve a higher return on investment.
Through careful planning and execution, the Asset Enhancement Initiative can help organizations enhance their competitive edge and drive sustainable growth in the long term.
Frasers Centrepoint Trust Share Price and Current Dividend Yield
In this section, let us take a look at Frasers Centrepoint Trust share price and its current dividend yield. Frasers Centrepoint Trust share price closed at S$2.13 on 28th January 2025. Based on Frasers Centrepoint Trust share price and FY24 DPU of 12.042 cents, Frasers Centrepoint Trust current dividend yield is 5.65%.
Summary of Frasers Centrepoint Trust FY25 Full Year Results
Based on Frasers Centrepoint Trust 1QFY25 operational updates, let me summarize the pros and cons.
The pros are:
- 65.5% of Frasers Centrepoint Trust’s debt are hedged to fixed interest rates.
- Well-spread debt maturity.
- No refinancing risks in FY25.
- High portfolio occupancy at 99.5%.
- Asset Enhancement Initiative (AEI) to rejuvenate old malls like Hougang Malls to unlock future growth and value.
- Acceptable current dividend yield at 5.65% based on current share price at S$2.13.
The cons are:
- High aggregate leverage at 39.3%.