Frasers Centrepoint Trust - Maybank Kim Eng 2021-04-26: Size Matters

FRASERS CENTREPOINT TRUST (SGX:J69U) | SGinvestors.io FRASERS CENTREPOINT TRUST (SGX:J69U)

Frasers Centrepoint Trust - Size Matters


Stable occupancy, mall performance a mixed bag

  • Frasers Centrepoint Trust's retail occupancy was stable at 96.1%, versus 96.4% in 1Q21, with better improvements at Changi City Point (from 90.7% to 94.7%), Century Square (94.1% to 96.4%) and Hougang Mall (95.6% to 99.3%) from new tenancies. These helped offset the weaker performance at Waterway Point (98.1% to 92.2%) and Tampines 1 (94.2% to 91.9%) as their anchor tenants exited.
  • Frasers Centrepoint Trust's expiring leases in FY21 eased to 20.0% (from 28.3% in 1Q21) with half of leases renewed, and are mostly concentrated at Tampines 1 (~25% of its NLA), Century Square (~47%) and Hougang Mall (c.49%).



Recovery gaining traction, rents to bottom out

  • Shopper traffic has continued to lag tenant sales, which have recovered to near pre-COVID levels. Rental reversion was at -0.7% (or otherwise +2.9%, if based previously on the difference of average rental rates between the new and preceding lease on same retail space).
  • Frasers Centrepoint Trust's management sees limited impact with the adoption of the Code of Conduct (which sets out guidelines for negotiation of lease agreements) from 1 Jun.
  • We see rent reversions improving on the back of tenant sales traction in 2H21.


AUM up, catalyst from capital recycling

  • The Asia Retail Fund (ARF) deal has helped to double Frasers Centrepoint Trust's AUM to S$6.4b. The quarter saw active asset recycling with completion of the S$110m Anchorpoint sale and announcement to divest Yew Tee Point for S$220m at 10% above valuation, set to be completed by 28 May.
  • Frasers Centrepoint Trust's leverage fell q-o-q from 37.7% to 35.2%, as cost of debt eased from 2.20% to 2.16%. Further asset recycling is likely, as management looks towards increasing yield on its larger malls.


Maintain BUY






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-04-26
SGX Stock Analyst Report BUY MAINTAIN BUY 2.900 SAME 2.900



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