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ALP REIT INVESTMENT CLUB
Frasers Centrepoint Trust (J69U)
(09May2016) close: S$2.01
12M-Target price: S$2.10
1.) Type of Reit: Retail REIT
2.) Number of property in the portfolio: FCT’s current portfolio comprises Causeway Point, Northpoint, Changi City Point, YewTee Point, Bedok Point and Anchorpoint. (Total 6) With combined appraised value of $2.46 billion as at 30 September 2015. FCT also receives steady overseas returns via its 31% strategic stake in Hektar REIT.
3.) Countries that the business operates in: Mainly Singapore.
4.) Top 5 properties that generates the highest revenue (Decreasing order): Causeway point (42.78%), Northpoint (26.60%), Changi City Point (13.60%), Yew Tee Point (7.42%) and Bedok Point (4.6%).
5.) Challenges: Poor diversification as Causeway Point already contributed almost half of the group total revenue. The group might face some refinancing risk. This is because FCT’s total gross borrowings stood at $718 million at 30 September 2015, of which $278 million of borrowing (about 38.7% of total borrowing) will mature in the next 12 months.
6.) Strengths: Many of the asset enhancement initiatives (AEIs) that the REIT has undertaken have proven to create good value for its unit-holders. For example, the AEIs on Northpoint, Anchorpoint, and Causeway Pointhave all achieved a return on investment of more than 10% each.
7.) Significant events: Moody’s changed the outlook of FCT’s Baa1 issuer rating to ‘Positive’ from ‘Stable’ on February 2015
9.) Recommendation: BUY. Even though the threat of e-commerce is real in the retail industry, the track record of Frasers Centrepoint Trust has shown us that retail malls are still able to survive and thrive in this environment as shown by its stable fundamental outlook. FCT has Near-monopoly of shopping malls in the north. With limited retail supply in the north of Singapore and strong population growth (88% over the next five to ten years), we believe that FCT will be a beneficiary of increase in retail spending and demand for shop space. However, do take note that FCT’s average occupancy is not doing well.
COMPILED BY: Ning
DISCLAMER: Readers should not rely solely on information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.
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