Frasers Commercial Trust’s Second Quarter Distribution Per Unit Falls By 4.4%
Frasers Commercial Trust (SGX: ND8U), or FCT, is a REIT that focuses primarily in commercial properties. It has ownership stakes in seven commercial properties located in Singapore, Australia and the United Kingdom. Its portfolio includes China Square Central, 55 Market Street and Alexandra Technopark in Singapore.
The REIT recently announced its second quarter results for the year ending 30 September 2018 (2Q FY18). Here, I will look at nine things that investors should know about its latest results.
1. Quarterly gross revenue declined 18% year-on-year to S$33.0 million while net property income reduced by 26.1% year-on-year to S$22.6 million.
2. Distribution per unit (DPU) for the quarter was down by 4.4% as compared to the same period last year to 2.4 Singapore cents.
3. Based on FCT’s annualised DPU of 9.6 cents (calculated using year-to-date DPU of 4.8 cents) and its closing unit price of S$1.46 on 20 April 2018, the REIT has a trailing distribution yield of 6.6%.
4. As of 31 March 2018, the REIT’s gearing stood at 35.3%, which is getting a little close to the regulatory ceiling of 45%.
5. The REIT’s portfolio had a committed occupancy rate of 83.5% at the end of the quarter. The committed occupancy rates for the Singapore portfolio, the Australia portfolio and Farnborough Business Park was 76.1%, 89.5% and 97.2% respectively.
6. The weighted average lease expiry was at four years as of 31 March 2018. Based on rental income, 49.1% of the REIT’s leases will expire between 2018 and 2021 whilst the rest will expire after 2022.
7. At Alexandra Technopark, a S$45 million asset enhancement initiative (AEI), which was announced on 23 January 2017, is expected to complete by around mid-2018. At China Square Central, a S$38 million AEI commenced during the quarter and will complete around mid-2019.
8. FCT has right of first refusal (ROFR) property pipeline of more than S$4 billion.
9. The acquisition of 50% interest in Farnborough Business Park at a property value of £87.5 million was completed on 29 January 2018. Jack Lam, chief executive of the REIT’s manager, commented on the latest acquisition:
“Farnborough Business Park is an award-winning, high-quality asset with solid fundamentals, and we are delighted to see its accretive contribution commencing from the end of January 2018. We will look to extract further value from the property and grow its income contribution even more going forward.
Farnborough Business Park is also part of Frasers Property Group’s network of business parks totalling more than 3 million square feet in the Thames Valley, which will see it benefitting from economies of scale and other synergistic values afforded by the portfolio.”