Lower property expenses helped to lift returns at Frasers Centrepoint Trust (FCT) and delivered a higher distribution per unit (DPU) for the second quarter.
DPU rose 2.6 per cent to 3.039 cents for the three months to March 31, up from 2.963 cents a year earlier, said FCT manager Frasers Centrepoint Asset Management yesterday.
Despite a 0.8 per cent dip in gross revenue to $47.1 million, net property income for the second quarter rose 0.4 per cent to $33.7 million.
The boost in returns came on the back of a drop in property expenses, owing to lower utility tariff rates and write-back of provisions for property tax, the trust manager said.
FCT's portfolio comprises six suburban malls: Causeway Point, Northpoint, Changi City Point, Bedok Point, YewTee Point and Anchorpoint. The bigger malls - Causeway Point, Northpoint and Changi City Point - accounted for about 86 per cent of net property income.
The portfolio occupancy as at March 31 fell to 92 per cent from 94.5 per cent in the previous quarter, due to a $60 million refurbishment at Northpoint that started last month.
AT A GLANCE
GROSS REVENUE: $47.1 million (-0.8%)
NET PROPERTY INCOME: $33.7 million (+0.4%)
DISTRIBUTION PER UNIT: 3.039 cents (+2.6%)
The trust manager told an earnings briefing yesterday that it aims to improve the average gross rental rate of Northpoint by 9 per cent when renovation works are completed in September 2017. The work is being conducted in phases and involves integrating Northpoint with the upcoming Northpoint City mall on an adjacent site.
Occupancy at Bedok Point improved 9.3 percentage points to 86.1 per cent with a gym operator starting a lease last month. Occupancy of the mall is expected to remain volatile.
Speaking at the briefing, Dr Chew Tuan Chiong, the chief executive of the trust manager, said: "The (renovation) should ultimately be a very strong sustainable push for our income growth.
"We still continue to see sales and visitor numbers to our malls. Suburban malls, if they are well located, are actually very defensive."
Despite the challenging retail scene, FCT's overall portfolio shopper traffic in the second quarter was up 11.4 per cent from the previous year. Its portfolio tenant sales from December to February rose by 2.1 per cent, with Causeway Point achieving the highest growth.
FCT had 27 lease renewals during the quarter, at a positive average rental reversion of 5.6 per cent. This brought the average rental reversion for the first half to a positive 12 per cent.
The trust manager noted that about half of the total net lettable area of expiring leases in the 2016 financial year have been renewed in the first two quarters. Net asset value per unit was $1.91 at the end of March, unchanged from Sept 30 last year.
FCT posted a 1.2 per cent increase in net property income to $67.2 million in the first half, on gross revenue of $94.2 million.
FCT units closed one cent down at $2 yesterday.