Fraser Commercial Trust Continue To Revamp Assets To Improve Yield
Key Highlights:
Fraser Commercial Trust's (SGX:ND8U) 4Q19 DPU was flat at 2.4 cents
The annualised yield and price to book ratio are 5.9% and 1.02 respectively
1. Dividends
Net property income and distribution per unit grew 0.5% to $21.6m. The increase was mainly due to
Higher contributions from Alexandra Technopark
Improved occupancy at Central Park
However, the increase in income was offset by
Higher amortisation of leasing incentives for Central Park and 357 Collins Street
Higher property tax
Weaker AUD currency
The annualised yield is 5.9%. It is currently trading near its historical low yield (5.5%).
2. Portfolio
Portfolio occupancy remains at 77.4%. However, the committed occupancy is at 95%. 12.5% of its leases will be up for renewal in 2020.
Portfolio leverage was down slightly to 28.6%. The interest cost is 2.97%, 87.8% of the loans are on fixed rates and 27.7% of the loans are due for refinancing next year. It is currently trading at a price to book ratio of 1.02.
3. Growth catalyst
The management is actively doing asset enhancement initiatives. The renovation at China Square Central has obtained TOP recently. The REIT manages to increase its retail space to 80,000 sf from 64,000 sf previously. And 80% of the space has been pre-committed.
The next asset enhancement will be on the Central Park, which is expected to be completed in third quarter of 2020. The enhancement will re-position it as one of the Perth's premium grade business locations.
Summary
The DPU has been remained flat for few years. While the management is working hard to improve the assets, we would continue to put it under our watchlist and observe its results in the next quarter.
Access to all new features and get the "Premium" for one year at 35% discount (Limited time only)! Get access now>>