Frasers Centrepoint Trust 2Q2020 Financial Results

Waterway Point

I have written about My Personal Analysis of Frasers Centrepoint Trust back in the year 2017. Till date, Frasers Centrepoint Trust has 7 suburban malls in its portfolio. They are Causeway Point, North Point, Waterway Point, Changi City Point, Bedok Point, Yew Tee Point and Anchor Point. Frasers Centrepoint Trust also held 31.17% of the units in Hektar Real Estate Investment Trust (“H-REIT”).

What is the impact of COVID-19 pandemic to Frasers Centrepoint Trust? How does Frasers Centrepoint Trust fare against Capitaland Mall Trust? Let us take a look at its latest financial results below.

On 23rd April 2020, Frasers Centrepoint Trust has released their 2Q2020 financial results. Gross revenue improved by 0.9% to S$50.2 million. However, Net Property Income (“NPI”) fell 1.3% to S$36.0 million.

Distributable income increased by 25.0% to S$36.0 million. As Frasers Centrepoint Trust decided to retain 50% of the distributable income to preserve financial flexibility in current time of uncertainty, the final distributable income declined by 38.3% to S$18.0 million. A distribution per unit (“DPU”) of 1.61 cents was declared which is a declined of 48.7% as compared to 2Q2019.

2Q2020 Financial Results

2Q2020
(S$’000)
2Q2019
(S$’000)
YoY(%)
Gross Revenue50,16849,7330.9%
Net Property Income35,96436,444(1.3%)
Distributable Amount (Before Capital Retention)36,00228,80825.0%
Distributable Amount (After Capital Retention)18,00029,158(38.3%)
Distribution Per Unit (“DPU”) (cents)1.61031.37(48.7%)

Occupancy

As of 31st March 2020, the overall portfolio occupancy is 96.1%. With the COVID-19 temporary measures in place, landlords will not be able to terminate the lease of tenants or claim back the rented premises if the tenant is unable to pay the rent during the relief period of 6 months.

The manager of Frasers Centrepoint Trust had passed on the full property tax rebate to qualifying tenants. Tenants can utilize their cash security deposits to offset one month’s rental. Under the S$45m Tenant Support Package (“TSP”) enhancement, one month of rental rebate will be provided to tenants in targeted manner, prioritised by their needs and circumstances. There will also be one month rental waiver to all entertainment, education and tuition centre tenants affected by the mandatory closure orders from 26 March 2020 to 30 April 2020.

Debt

As of 31st March 2020, gearing ratio stood at 37.4%.

Current Dividend Yield

Based on the full year FY19 distribution of 12.07 cents and current share price of S$1.99, this translates to current dividend yield of 6.07%.

Summary

The current dividend yield of 6.07% is definitely attractive. As we are coming to the end of “Circuit Breaker”, more shops are opening up. This should bring back some shoppers.

However, as we are still in the midst of the COVID-19 pandemic, I will advice to buy in small lots because nobody can foresee the depth of the financial impact created by the COVID-19 pandemic, especially to the retail segment.

Similarly like Capitaland Mall Trust, I shall continue to monitor the financial results in the upcoming quarters.

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