For those of you who like to invest in a REIT that invest solely in properties in Singapore, Frasers Centrepoint Trust (SGX: J69U), or FCT for short, is one you can look at.

The REIT invests in income-producing properties used for commercial purposes (retail or office), where at the time of writing, its portfolio comprises 9 retail properties (Causeway Point, Century Square, Hougang Mall, NEX (effective 50.0% interest), Northpoint City North Wing (including Yishun 10 Retail Podium), Tampines 1, Tiong Bahru Plaza, Waterway Point (effective 50.0% interest), as well as White Sands) and 1 office property (Central Plaza), all of them located in suburban areas in Singapore, and valued at approximately S$7.1 billion.

Last evening (24 July), FCT have released its business update for the 3rd quarter of the financial year ended 30 June 2024 (i.e., Q3 FY2023/24) – and in this post, you will find a quick review of its portfolio occupancy and debt profile.

Let’s begin:

Portfolio Occupancy (Q2 FY2023/24 vs. Q3 FY2023/24)

In the table below, you will find FCT’s portfolio occupancy profile for the current quarter under review (i.e., Q3 FY2023/24 ended 30 June) compared against that reported in the previous quarter (i.e., Q2 FY2023/24 ended 31 March) to find out whether if it has continued to remain at a high level:

My Observations: FCT’s portfolio occupancy dipped by 0.2 percentage points (pp) to 99.7%, as a result of a slight decline in the occupancy rates of all of its properties except for Nex and Waterway Point (no change), as well as for Northpoint City North Wing (including Yishun 10) (by 0.1pp to 100.0%), and Tiong Bahru Plaza (by 0.4pp to 100.0%).

Apart from Central Plaza (office), where its occupancy rate was at 91.4%, the occupancy rate for its retail properties have an occupancy rate of at least 99.0% – which I consider to be very high.

In terms of lease maturity, it was very well-spread out – with 4.3% of the leases by gross rental income due for renewal in the final quarter of FY2023/24, and about 28.0% of the leases will be due for renewal in each financial year over the next 3 financial years (between FY2024/25 and FY2026/27).

Finally, top 10 tenants contribute 20.9% towards the REIT’s gross rental income (GRI) – apart from NTUC Fairprice (which contributed 6.2% towards the REIT’s GRI), no other tenants contribute more than 3.5% towards its GRI.

Debt Profile (Q2 FY2023/24 vs. Q3 FY2023/24)

Just like how I have looked at the FCT’s portfolio occupancy profile in the previous section, I will also be looking at its debt profile by comparing the statistics reported for the current quarter under review (i.e., Q3 FY2023/24), against that reported in the previous quarter (i.e., Q2 FY2023/24), to find out if it has continued to remain in a healthy position (this becomes extremely important as a result of the high interest rate environment we are in right now):

My Observations: Apart from a slight increase in its aggregate leverage (by 0.6pp to 39.1%), and a decline in the percentage in terms of botrowings hedged to fixed rates (by 1.3pp to 67.2% – but personally, I’m not too concerned at this point in time, as the US Federal Reserve is on the cusp of cutting benchmark rates, and those with a lower percentage of borrowings hedged at fixed rates will be among the first to benefit in my opinion) will all the other stats remain more or less the same.

Zooming into its aggregate leverage, at 39.1%, it continues to be at a healthy level.

Looking at FCT’s debt maturity profile, it has no more borrowings due for refinancing in the final quarter of FY2023/24. In the coming financial year 2024/25, it has 15.7% (or S$327.0m) of borrowings due for refinancing. In the subsequent 4 years (between FY2025/26 and FY2028/29), it has about 21% of borrowings due for refinancing each year – which is well-staggered.

Closing Thoughts

FCT reported a slight decline in its portfolio occupancy – largely de to Central Plaza (office), which saw its occupancy rate fell by 2.4pp to 91.4% compared to the previous quarter (i.e., Q2 FY2023/24 ended 31 March), but its of little concern to me, as the occupancy rate for the property continues to remain at a high level. For its retail malls, each of them have an occupancy rate of at least 99.0%, which is very high.

For its debt profile, while its aggregate leverage inched up slightly (compared to Q2 FY2023/24) to 39.1%, but at this level, it is still a healthy one, with a good debt headroom before the regulatory limit (set by the Monetary Authority of Singapore, or MAS for short) is reached. Debt maturity over the next couple of years ahead is also well-spread out.

To conclude, as a unitholder, you can say I am satisfied with the REIT’s latest portfolio occupancy and debt profile update.

With that, I have come to the end of my review of Frasers Centrepoint Trust’s business update for the 3rd quarter of FY2024/25. Do note that all the opinions expressed in this post are for educational purposes only, and they do not comprise any buy or sell calls for the REIT’s units. You should always do your own due diligence before you make any investment decisions.

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Disclaimer: At the time of writing, I am a unitholder of Frasers Centrepoint Trust.

The post Frasers Centrepoint Trust's Q3 FY2023/24 Business Update: A Review of its Portfolio Occupancy and Debt Profile first appeared on The Singaporean Investor.