CAPITALAND MALL TRUST (SGX:C38U)
KEPPEL REIT (SGX:K71U)
SUNTEC REAL ESTATE INV TRUST (SGX:T82U)
FRASERS CENTREPOINT TRUST (SGX:J69U)
Singapore REITs - CMT, KREIT, SUN 4Q19; FCT 1QFY20 - All In Line
- Capitaland Mall Trust (SGX:C38U), Frasers Centrepoint Trust (SGX:J69U) reported good results with DPU increasing 4.0%, 1.3% y-o-y respectively.
- Capitaland Mall Trust (BUY/Target: S$2.88) will morph into the largest S-REIT with its diversified exposures to office, retail and integrated developments.
- Frasers Centrepoint Trust (BUY/Target: S$3.05) aims to increase its market share in suburban retail.
- Maintain OVERWEIGHT on the sector.
CapitaLand Mall Trust 4Q19 RESULTS
- Results in line. Capitaland Mall Trust (SGX:C38U) posted a 4Q19 DPU of 3.11 S cents (+4.0% y-o-y), bringing FY19 DPU to 11.97 S cents (+4.1% y-o-y).
- Portfolio occupancy remained stable at 99.3% in 4Q19 (+0.4ppt q-o-q). Newly-completed Funan (opened in Jun 19) improved its occupancy from 96.1% in 2Q19 to 99.0% in 4Q19. Occupancy at Clarke Quay has improved by 4.6ppt q-o-q to 100.0%.
- Maintained positive reversions. Overall occupancy was stable at 99.3% as at Dec 19 (Sep 19: 98.9%). Capitaland Mall Trust achieved positive rental reversion of 0.8% on a portfolio basis in 4Q19 (3Q19: 1.2%). Major contributors were IMM building (+3.5%), Lot One Shoppers’ Mall (+2.7%) and Westgate (+2.1%). Retention rate was healthy at 83.0%. Shopper traffic grew 1.4% y-o-y in FY19.
- Management sees window of opportunities to execute growth strategies due to moderation of retail supply in Singapore and benign interest rate environment.
- Maintain BUY and target price of S$2.88 based on DDM (required rate of return: 6.0%, terminal growth: 1.5%).
- See Capitaland Mall Trust Share Price; Capitaland Mall Trust Target Price; Capitaland Mall Trust Analyst Reports; Capitaland Mall Trust Dividend History; Capitaland Mall Trust Announcements; Capitaland Mall Trust Latest News.
Frasers Centrepoint Trust 1QFY20 Results
- Results in line. Frasers Centrepoint Trust (SGX:J69U) posted a 1QFY20 DPU of 3.06 S cents (+1.3% y-o-y). Distributable income was boosted by newly acquired PGIM ARF (24.8% stake) and Waterway Point (40% stake). Dividends from PGIM ARF was S$4.1m, and dividends from Waterway Point was S$3.6m (excluding interest income of S$0.7m).
- Portfolio occupancy improved 0.8ppt q-o-q to 97.3% in 1QFY20. Occupancy at Causeway Point improved 0.8ppt q-o-q after the completion of an underground pedestrian link to Woods Square in Dec 19 (link to be opened in Jul 20). Occupancy at Anchorpoint improved 14.5ppt q-o-q to 93.5% due to the changeover of anchor tenant from Cold Storage to Mr DIY in Nov 19.
- Achieved positive rental reversions of 5.0%. Key contributors were Causeway Point (+7.1%), Changi City Point (+5.1%) and Anchorpoint (+5.1%). Frasers Centrepoint Trust signed 60 leases with total NLA of 142,103sf in 1QFY20. Shopper traffic increased 8.4% y-o-y driven by Northpoint City North Wing (relocation of bus interchange).
- Balance sheet is strong with gearing at 33.2%. Frasers Centrepoint Trust’s all-in cost of borrowings improved by 6bp q-o-q to 2.57%. Interest coverage ratio by a healthy 5.9x.
- Expand market share in suburban retail malls. Frasers Centrepoint Trust will continue to focus on Singapore suburban retail malls, which is more resilient. It aims to increase market share. Causeway Point will benefit from the opening of Thomson East Coast Line (first stage with three MRT stations to commence on 31 Jan 20). Waterway Point will benefit from development of 50-hectare Punggol Digital District, which is scheduled to complete in 2023.
- Maintain BUY and target price of S$3.05 based on DDM (required rate of return: 6.0%, terminal growth: 2.0%).
- See Frasers Centrepoint Trust Share Price; Frasers Centrepoint Trust Target Price; Frasers Centrepoint Trust Analyst Reports; Frasers Centrepoint Trust Dividend History; Frasers Centrepoint Trust Announcements; Frasers Centrepoint Trust Latest News.
Keppel REIT 4Q19 Results
- Results in line. Keppel REIT (SGX:K71U) posted a 4Q19 DPU of 1.40 S cents (+2.9% y-o-y), bringing 2019 DPU to 5.58 S cents (+0.4% y-o-y). It benefitted from the acquisition of T Tower (May 19) but divested Bugis Junction Tower (Nov 19) and 20% stake in Ocean Financial Centre (Dec 18). There was capital gain distribution of S$4m for the quarter.
- Portfolio occupancy improved slightly to 99.1% in 4Q19 (+0.2ppt q-o-q). Committed occupancy was 98.8% for Singapore and 99.9% for Australia as at Dec 19. Occupancy for OFC improved 0.6ppt q-o-q to 99.2%. Newly-acquired T Tower in Seoul is fully occupied. WALE remains long at 4.9 years (top-10 tenants: 7.0 years).
- Continued positive rental reversion expected. According to CBRE, Singapore average Grade-A office rents continue to trend upwards and have increased from S$11.45 to S$11.55psf pm in 4Q19. Leases committed totalled 831,200sf in 2019. Most leases concluded were in Singapore where the average signing rent was S$12.42psf pm, up 11.9%. More than half were new leases and expansions from tenants mainly in the technology, media & telecommunications and real estate & property services sectors. Management disclosed that the average rents for expiring leases are S$9.69psf pm for 2020, S$9.74psf for 2021 and S$10.20psf pm for 2022. Thus, Keppel REIT is likely to maintain positive rental reversion for its Singapore office properties.
- Two major leases to commence in 2Q20. HSBC Singapore will commence a 10-year lease at MBFC Tower 2 in May 20. In Australia, Victoria Police will commence 30-year lease upon completion of 311 Spencer Street.
- Gearing was lowered from 38.9% to 35.8% due to repayment of loans with divestment proceeds from Bugis Junction Tower. Keppel REIT bought back and cancelled 37.9m units in 4Q19.
- Maintain HOLD and target price of S$1.20 based on DDM (required rate of return: 6.0%, terminal growth: 1.5%). Entry price is S$1.10.
- See Keppel REIT Share Price; Keppel REIT Target Price; Keppel REIT Analyst Reports; Keppel REIT Dividend History; Keppel REIT Announcements; Keppel REIT Latest News.
Suntec REIT 4Q19 Results
- Results in line. Suntec REIT (SGX:T82U) posted a 4Q19 DPU of 2.347 S cents (-9.4% y-o-y), bringing 2019 DPU to 9.507 S cents (-4.8% y-o-y). Capital gain distribution dropped 48% y-o-y to S$6.5m in 4Q19.
- Healthy occupancies across office portfolio. Overall office occupancy stood at 98.7% (+0.1ppt q-o-q). The Singapore office portfolio achieved an overall committed occupancy of 99.1% (+0.1ppt q-o-q). The committed occupancies for Suntec City Office, One Raffles Quay, Marina Bay Financial Centre Properties and 9 Penang Road were 100%, 97.8%, 98.5% and 96.7% respectively. Suntec City Office achieved 100% committed occupancy (+1.4% y-o-y) and recorded the seventh consecutive quarter of positive rent reversions (4Q19: committed rents at S$9.30 to S$11.00psf compared to average expired rents at S$8.24psf).
- In Australia, the committed occupancies for 177 Pacific Highway, Southgate Complex (Office) and 55 Currie Street were 100%, 100% and 91.7% respectively.
- Singapore retail portfolio resilient. Occupancy at Suntec City Mall was stable at 99.6%. Footfall grew 3.9% while tenant sales increased 0.7% in FY19. It achieved positive rental reversion of 5.1% in 2019. It achieved 20 consecutive quarters of positive rent reversions.
- Maintain HOLD and target price of S$1.99 based on DDM (required rate of return: 5.75%, terminal growth: 1.0%). Entry price is S$1.82.
- See Suntec REIT Share Price; Suntec REIT Target Price; Suntec REIT Analyst Reports; Suntec REIT Dividend History; Suntec REIT Announcements; Suntec REIT Latest News.
Jonathan KOH CFA
UOB Kay Hian Research
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Peihao LOKE
UOB Kay Hian
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https://research.uobkayhian.com/
2020-01-23
SGX Stock
Analyst Report
2.880
SAME
2.880
1.200
SAME
1.200
1.990
SAME
1.990
3.050
SAME
3.050
