Frasers Centrepoint Trust (SGX: J69U) is one of the few Singapore-listed REITs that has all of its properties located in the city state (and this may interest investors who has a preference for REITs that is purely Singapore centric).

Also, all but one of its properties are retail malls, and they are located in the various suburban locations in Singapore. As of 31 December 2024, its portfolio comprises 9 retail malls and 1 office property valued at approximately S$7.1 billion.

Yesterday (22 January) evening, Frasers Centrepoint Trust (FCT) released its business update for the 1st quarter of FY2024/25 ended 31 December 2024.

No financial figures were reported this time round (as it is just a business update), only portfolio occupancy and debt profile – both of which you will find my review on in this post, where I will be comparing the statistics reported for the current quarter under review against that reported in the previous quarter 3 months ago (i.e., 4Q FY2023/24 ended 30 September 2024):

Portfolio Occupancy Profile (4Q FY2023/24 vs. 1Q FY2024/25)

FCT has maintained a very healthy portfolio occupancy rate of above 95% over the quarters. As far as portfolio WALE is concerned, for retail properties, they are normally at around 1+ to 2+ years – this is to allow the landlords to continually refresh offerings at the malls to attract shoppers to return.

The following table is a comparison of FCT's portfolio occupancy rate reported for the current quarter (i.e., 1Q FY2024/25) against that reported 3 months ago (i.e., 4Q FY2023/24):

My Observations: Apart from a slight dip (by 0.2 percentage points, or pp for short) in its portfolio occupancy (contributed by Tiong Bahru Plaza [from 98.3% in 4Q FY2023/24 to 97.1% in 1Q FY2024/25], Hougang Mall [from 99.3% in 4Q FY2023/24 to 98.1% in 1Q FY2024/25], as well as White Sands [from 99.4% in 4Q FY2023/24 to 98.7% in 1Q FY2024/25]), all other statistics remained stable.

As far as the occupancy rates of the properties are concerned, most of them are above 99%, except for Tiong Bahru Plaza (97.1%), Hougang Mall (98.1%), White Sands (98.7%), and Central Plaza (97.5%).

Top 10 tenants contribute 19.0% towards the REIT’s gross rental income, with its top tenant (NTUC Fairprice) contributing 5.6%.

Debt Profile (4Q FY2023/24 vs. 1Q FY2024/25)

FCT also boasts a very healthy debt profile, where its aggregate leverage has been maintained at a very healthy level of around high-30% range over the quarters.

However, it has a rather low percentage of borrowings hedged at fixed rates (at around 60-70+%), which wasn't exactly very ideal a few years ago when interest rates are rising, but right now, it is going to be among the first to benefit from any interest rate cuts announcements.

With that, let us look at FCT's debt profile reported for the current quarter under review (i.e., 1Q FY2024/25) compared against that reported in the previous quarter 3 months ago (i.e., 4Q FY2023/24):

My Observations: A slightly mixed set of statistics in my opinion – with aggregate leverage inching up by 0.8pp, and interest coverage edging down, but improvements can be seen in its average cost of debt, which fell slightly.

A few things to note here – with an aggregate leverage of 39.3%, it continues to remain healthy. Also, with 34.5% of borrowings at floating rates, coupled with a 1% cut in benchmark borrowing rates by the US Federal Reserve last year (i.e., calendar year 2024), its average cost of debt could continue to slide in the coming quarters ahead.

Finally, as far as debt maturity is concerned, it does not have any refinancing obligations in the current financial year. Between FY2025/26 and FY2029/30 (a period of 5 financial years), it has an average of about 20% of borrowings due for refinancing each year.

Closing Thoughts

A pretty decent set of portfolio occupancy and debt profile statistics reported by the REIT for 1Q FY2024/25 ended 31 December 2024.

Even though portfolio occupancy dipped slightly, but more than half of the properties have an occupancy rate of at least 99%, with the other half at least 97% occupied – which I consider to be at a high level.

For its debt profile, no doubt its aggregate leverage inched up slightly to 39.3%, but it is still a healthy distance away from the regulatory level of 50.0%.

The fact that the REIT has only 65.5% of borrowings hedged at fixed rates, with the remaining 34.5% at floating rates mean that it will reap the benefits of a 1% cut in benchmark borrowing rates by the US Federal Reserve announced in 2024 – which could translate into potentially an improvement in its distribution payout to unitholders in the coming quarters.

Speaking of which, as FCT has a half-yearly distribution payout frequency, no distributions are declared this time round.

With that, I have come to the end of my review of FCT's latest business update. Do take note that all the opinions expressed above are purely mine which I'm sharing for educational purposes only. They do not represent any buy or sell calls for the REIT's units. You are strongly encouraged to do your own due diligence before making any investment decisions.

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Disclaimer: At the time of writing, I am a unitholder of Frasers Centrepoint Trust.

The post A Review of Frasers Centrepoint Trust's 1Q FY2024/25 Business Update first appeared on The Singaporean Investor.