Lower property expenses boost FCT's Q1 returns

DR CHEW TUAN CHIONG, chief executive of Frasers Centrepoint Asset Management, the manager of FCT.
DR CHEW TUAN CHIONG, chief executive of Frasers Centrepoint Asset Management, the manager of FCT.

Lower property expenses boosted returns at Frasers Centrepoint Trust (FCT) and delivered a better distribution per unit (DPU) for its first quarter.

DPU for the three months to Dec 31 rose 4.4 per cent to 2.87 cents, up from 2.75 cents a year earlier.

Net property income for the first quarter climbed 2 per cent to $33.5 million, thanks to a decline in property expenses due to lower utility tariff rates and fewer maintenance and repair works.

Property expenses came in at $13.5 million for the quarter, down 5.2 per cent compared with the previous year.

However, the decline was partly offset by higher property tax, the trust manager added yesterday.

PROMISING START

We are pleased that FCT has delivered another good set of financial results with steady operating performance, despite the challenges in the retail sector. This is a good start for the new financial year.

DR CHEW TUAN CHIONG, chief executive of Frasers Centrepoint Asset Management, the manager of FCT.

Distribution to unitholders increased 4.5 per cent to about $26.3 million, while gross revenue dipped marginally by 0.2 per cent to about $47.1 million.

"We are pleased that FCT has delivered another good set of financial results with steady operating performance, despite the challenges in the retail sector. This is a good start for the new financial year," said Dr Chew Tuan Chiong, chief executive of Frasers Centrepoint Asset Management, the manager of FCT.

The trust manager's priorities include renovations at Northpoint mall, due to start in March. The 18-month programme is expected to "deliver a positive return upon completion", it added.

FCT's portfolio comprises six suburban malls: Causeway Point, Northpoint, Changi City Point, Bedok Point, YewTee Point and Anchorpoint.

The portfolio occupancy as at Dec 31 was 94.5 per cent, compared with 96 per cent at the end of September. The trust manager attributed the drop in occupancy to Bedok Point and Changi City Point, which saw softer demand for new and renewed leases.

  • AT A GLANCE

  • GROSS REVENUE: $47.1 million (-0.2%)

    NET PROPERTY INCOME: $33.5 million (+2%)

    DISTRIBUTION PER UNIT: 2.87 cents (+4.4%)

FCT had a gearing of 28.3 per cent as at Dec 31, with average cost of borrowings at 2.361 per cent. The trust manager said about 74 per cent of borrowings are "on fixed interest rates or have been hedged via interest rate swaps". Net asset value per unit was $1.91 as at Dec 31, unchanged from Sept 30.

Despite the headwinds in the retail industry, the trust manager believes that FCT's well-located suburban malls will continue to attract shoppers.

FCT units closed 2.5 cents lower at $1.84 yesterday.

A version of this article appeared in the print edition of The Straits Times on January 22, 2016, with the headline 'Lower property expenses boost FCT's Q1 returns'. Print Edition | Subscribe