Frasers Centrepoint Trust (FCT) reported its 4QFY16 results this morning which came in within our expectations. Gross revenue was down by 6.0% YoY to S$44.6m due to its ongoing Northpoint AEI. NPI declined marginally by 0.9% to S$31.4m as the softer revenue was partially offset by lower utility tariff rates and other property expenses.

Consequently, DPU decreased by 1.5% YoY to 2.815 S cents. On a full-year basis, FCT’s gross revenue and NPI slipped 2.9% and 0.9% to S$183.8m and S$129.9m, respectively, with the latter forming 100.1% of our FY16 forecast. DPU of 11.764 S cents represented slight growth of 1.3% and made up 100.6% of our projection.

During the quarter, FCT delivered average positive rental reversions of 4.6%, with strong growth led by Changi City Point (+14.1%) and YewTee Point (+6.6%). Portfolio occupancy declined from 90.8% as at end Jun 2016 to 89.4%, which is unsurprising given the ongoing AEI at Northpoint. We will provide more details after the analyst briefing.

Reiterate our BUY rating on FCT, but we will be reviewing our S$2.32 fair value estimate.

Source: OCBC Research - 21 Oct 2016