Frasers Centerpoint Trust's Dividends Went Up Slightly With Strong Portfolio

Key Highlights

• Distribution per unit (DPU) went up slighty (1.8%) to 2.913 cents

• Portfolio remains strong with positive rental reversion

• The REIT is recently added to FTSE NAREIT Index

1. Distribution per unit

4Q2019 bet property income dropped 0.1% to $32.8m. However, if accounting adjustments are excluded, net property income would have gone up 4.8%. The contribution came from higher portfolio occupancy from Northpoint City North Wing, Changi City Point and YewTee Point.

DPU went up 1.8%. The REIT is currently trading at a yield of 4.3%.

2. Portfolio occupancy and rental reversion

With a portfolio focus of suburban malls, Fraser Centrepoint Trust enjoyed stronger shopper traffic last quarter. All malls have seen positive rental reversion except Bedok Point.

Portfolio occupancy dropped slightly to 96.5%, largely due to the lower occupancy at Anchorpoint of 79%. However, the pre-committed occupancy for the mall has reached 94.2%. We should see more incoming tenants soon.

3. Growth Catalyst

Moving forward, the additional investments are expected in Waterway Point, which will help to expand both its portfolio and income diversification. Besides, the REIT was added to the FTSE NAREIT Index. This will help to enhance its investor base as the fund managers and institutional investors rebalance their portfolio.

Summary

Fraser Centerpoint Trust is well-positioned with a portfolio of suburban malls, which is also aligned with the government direction to develop the suburban areas. The fundamentals of the REIT is strong, but we think that it is slightly "expensive" at the current level.