Frasers Commercial Trust posts higher Q3 earnings

Alexandra Technopark continued to boost the performance of the trust during the quarter.
Alexandra Technopark continued to boost the performance of the trust during the quarter.PHOTO: FRASERS COMMERCIAL TRUST

Contributions from properties help boost performance; DPU, distributable income both up

Stronger contributions from two properties and the completed acquisition of a third helped lift third-quarter earnings at Frasers Commercial Trust (FCOT).

The trust yesterday posted a 19 per cent rise in distributable income to $19.1 million for the three months to June 30, up on the $16.1 million in the same period a year ago. Distribution per unit for the quarter rose 3 per cent to 2.41 cents, and will be paid out on Aug 29.

Gross revenue grew 11 per cent to $38.6 million while net property income increased 16 per cent to $28.1 million. This was largely due to a better performance at Alexandra Technopark on the back of higher rentals and lower utilities expenses.

There were reduced expenses for repair and maintenance and painting at Caroline Chisholm Centre, while the contribution from 357 Collins Street, which was fully acquired last August, also bolstered the numbers, said the trust's manager.

But the gain was partially offset by the weakening Australian dollar on income from its Australian properties, as well as a lower occupancy rate for China Square Central and Central Park.

  • AT A GLANCE

  • GROSS REVENUE

    $38.6 million (+11%)

    NET PROPERTY INCOME

    $28.1 million (+16%)

    DISTRIBUTABLE INCOME

    $19.1 million (+19%)

    DISTRIBUTION PER UNIT:

    2.41 cents (+3%)

Earnings per unit for the quarter came in at 2.07 cents compared with 2.05 cents previously.

The trust's growth comes amid a "weaker economic outlook", said Mr Low Chee Wah, chief executive of the manager, noting that Alexandra Technopark and 357 Collins Street continued to boost the performance of the trust during the quarter. "Our focus on proactive asset management and leasing initiatives has yielded positive results," he added.

"During the quarter, we have reduced the lease expires to 1.5 per cent for the remaining financial year despite the challenging leasing environment in the Singapore office market, compared to 6.4 per cent in the previous quarter."

Mr Low also said that Microsoft Operations has extended its lease at Alexandra Technopark for five more years to the 2022 fiscal year, "(reinforcing) the property's appeal as an attractive business address within the Alexandra Precinct".

Average occupancy rates across the trust's portfolio of six properties in Singapore and Australia were 93.3 per cent as at June 30, while its weighted average lease expiry stood at about 3.1 years.

The trust's Singapore properties enjoyed positive weighted average rental reversions of between 5.5 and 10.3 per cent during the quarter, given the low passing rents of expiring leases, said the manager.

The gearing ratio was 36.3 per cent at March 31, with the weighted average debt maturity at 2.6 years.

The manager added that the trust hedges its anticipated net Australian dollar-denominated income at least six to nine months forward to manage its foreign currency exposure.

FCOT units closed flat at 1.345 cents yesterday, before the results were announced.

A version of this article appeared in the print edition of The Straits Times on July 23, 2016, with the headline 'Frasers Commercial Trust posts higher Q3 earnings'. Print Edition | Subscribe