3 Things You Should Know About Frasers Centrepoint Trust’s Latest Results

Shopping mall Tampines Singapore

Tim Phillips

March 24, 2022

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With the bulk of results and earnings having already been reported, it’s worth investors’ time to mull over the numbers now that we’ve had time to digest them.

Since the war between Ukraine and Russia began, stock markets have been volatile. However, one thing commentators do agree on is that real estate investment trusts (REITs) in Singapore can provide investors with some shelter during market volatility.

If you truly want to “insulate” yourself from outside forces on your REIT portfolio, then you can always consider investing in Singapore-focused REITs.

Perhaps one of the best-known Singapore-focused REITs is suburban and heartlands malls owner Frasers Centrepoint Trust (SGX: J69U).

The REIT reported its first-quarter fiscal year (FY) 2022 earnings (for the three months ended 31 December 2021) in late January.

Here are three things dividend investors should know about Frasers Centrepoint Trust’s latest earnings as we enter the second quarter of 2022 next week.

1. Portfolio occupancy level stable

As with any REIT, the occupancy level is something that is closely watched by investors. That’s because it illustrates how in demand the REIT’s properties are.

In Frasers Centrepoint Trust’s case, its committed retail portfolio occupancy rate was stable in its latest quarter at 97.2%.

While there was a drop in the REIT’s occupancy rate at its commercial property – Central Plaza – due to an anchor tenant exiting, the majority of its retail properties saw broadly stable occupancy rates (see below).

Frasers Centrepoint Trust Q1 FY2022 portfolio occupancy rates

FCT portfolio occupancy

Source: Frasers Centrepoint Trust Q1 FY2022 earnings presentation

2. Healthy gearing and balance sheet

With all REITs, how the management teams manage their gearing (debt) levels and whether the debt maturity profile is staggered are important factors.

With regards to Frasers Centrepoint Trust, it had a very healthy gearing level of 34.5% as of 31 December 2021.

Meanwhile, the interest cover it had actually increased during the quarter to 5.81 times while its average cost of debt was stable at 2.2%.

The REIT also only has just over 10% of its total borrowings that are due for repayment this fiscal year. (see below).

FCT gearing debt

Source: Frasers Centrepoint Trust Q1 FY2022 earnings presentation

3. Improving tenants’ sales trend

Unsurprisingly, retail REITs were hit hard by the Covid-19 pandemic as shopper footfall fell precipitously on lockdown measures in Singapore.

However, with the recent easing of restrictions in late 2021 and with even looser restrictions from next week (after PM Lee Hsein Loong’s speech earlier today), the reopening of the local economy is on track.

Those green shoots of recovery were evident in Fraser Centrepoint Trust’s latest earnings, as its portfolio’s tenants’ sales – as a percentage of 2019’s average revenue – was 6% higher in December 2021.

Numbers like that should continue to improve for the REIT in the current quarter we are in as well as the second and third quarters of 2022.

Reopening REIT

Frasers Centrepoint Trust has been a reliable “Singapore-only” REIT that gives investors exposure to the consumer story in Singapore while also proving defensive given its exposure to suburban malls that Singaporeans frequent for daily necessities.

Now, with the reopening of the local economy set to continue further, it should be one of the key REIT beneficiaries as dining in larger groups returns.

Given its unit price of S$2.38 and its FY2021 full-year distribution per unit (DPU) – or dividend – of 12.085 Singapore cents, Frasers Centrepoint Trust shares are currently yielding an attractive 5.1%.

Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.

About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer. In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.