Frasers Commercial Trust (FCOT) reported its 2QFY16 results this morning which met our expectations. Gross revenue jumped 12.0% YoY to S$39.0m, while DPU increased 2.9% to 2.45 S cents. Growth was underpinned by the completion of the acquisition of 357 Collins Street on 18 Aug 2015, higher income contribution from Alexandra Technopark (ATP) and lower repair, maintenance and painting expenses at Caroline Chisholm Centre, but partially offset by higher finance costs and an enlarged unit base.

For 1HFY16, FCOT’s gross revenue rose 11.9% to S$78.6m and this formed 49.3% of our FY16 forecast. DPU of 4.96 S cents represented growth of 2.5% and constituted 50.4% of our full-year projection.

On a portfolio basis, FCOT’s occupancy was relatively stable at 92.6% (-0.3 ppt QoQ). Management achieved positive rental reversions across its Singapore assets, with rental uplifts of 2.4%, 5.4% and 5.3% coming in at China Square Central, 55 Market Street and ATP, respectively. We will provide more details after the analyst briefing. Maintain BUY and S$1.42 fair value on FCOT.

Source: OCBC Research - 21 Apr 2016