Slight boost for Frasers' Q1 distributable income

Higher rentals and lower utilities expenses helped boost first-quarter distributable income at commercial property landlord Frasers Commercial Trust (FCOT).

The trust, which owns three properties in Singapore and three in Australia, posted a distribution per unit (DPU) of 2.51 cents for the three months ended Dec 31.

It was up 2 per cent from the corresponding quarter a year earlier. The distribution will be paid out on Feb 29.

Distributable income rose 17.9 per cent over the corresponding period a year ago to $19.7 million.

Gross revenue for the quarter was up 11.7 per cent from a year ago to $39.6 million, while net property income increased by 15.5 per cent to $29.4 million.

  • FIRST QUARTER 2016 RESULTS

  • DISTRIBUTION PER UNIT:
    2.51 cents (+2%)


    GROSS REVENUE:
    $39.6 million (+11.7%)


    NET PROPERTY INCOME:
    $29.4 million (+15.5%)


    DISTRIBUTABLE INCOME:
    $19.7 million (+17.9%)

This was largely thanks to the the first full-quarter contribution from 357 Collins Street in Melbourne, as well as the better performance of Alexandra Technopark due to higher rentals, upfront rental income received and lower utilities expenses.

However, these factors were slightly offset by the effects of the weakening Australian dollar on income received from Australian properties, and lower occupancy rates for China Square Central and Central Park.

The trust said Singapore's slowing economy is weighing on tenants' demand for space but some sectors are faring better than others.

"The downturn in the energy and commodities industries has hit demand and the continuing challenges in the financial sector has reduced the volume of space occupied by banks," it said in its statement yesterday.

Sectors that are holding up well include Asian and Japanese financial institutions, insurance and pharmaceutical companies.

FCOT's Singapore properties saw positive weighted average rental reversions of between 5 per cent to 10.3 per cent in the quarter.

Commercial property demand in Australia - particularly in Melbourne and Perth where the trust owns properties - is also expected to remain relatively soft.

The trust hit an occupancy rate of 92.9 per cent for its portfolio as at Dec 31, it said in its statement yesterday.

The occupancy rate in Singapore was 92.7 per cent, while Australia's came in at 93 per cent.

FCOT also said its site for the development of a 16-storey hotel at China Square Central has been handed over in preparation of construction works.

The hotel will be developed by an entity of Frasers Centrepoint Limited and operated by Frasers Hospitality under the Capri by Fraser brand.

China Square Central will also be renovated to create new retail and commercial spaces "with better frontage and visibility".

"In the light of the weaker global economic outlook, the manager will continue its proactive asset management and leasing activities to achieve healthy occupancies," said Mr Low Chee Wah, chief executive of Frasers Centrepoint Asset Management, which manages FCOT.

A version of this article appeared in the print edition of The Straits Times on January 21, 2016, with the headline 'Slight boost for Frasers' Q1 distributable income'. Print Edition | Subscribe