Frasers Centrepoint Trust reports slight dip in occupancy - Our Quick Take

Summary of Frasers Centrepoint Trust's 3Q24 results

Frasers Centrepoint Trust (FCT) provided a business update for the fiscal year third quarter ended 30 June 2024.

Frasers Centrepoint Trust's committed occupancy for its retail portfolio dipped slightly to 99.7% in 3Q24 from 99.9% in 2Q24.

The decline in occupancy was driven by a decline in the occupancy rate of Century Square and Causeway Point. There was also a fall in the occupancy of Central Plaza (office), 

However, it managed to maintain more than 99% committed occupancy at every mall in is portfolio.

Across its portfolio, shopper traffic growth in 3Q24 moderated to 4.1% year-on-year from 8.1% in 2Q24. 

Tenant sales growth also moderated to 0.7% year-on-year in 3Q24 from 4.3% in 2Q24. 

The slowdown in shopper traffic growth and tenant sales would be broadly inline with the decline in Singapore retail sales in the past quarter, as we noted in our recent Singapore REITs outlook report. 

Fraser Centrepoint Trust's gearing rose slightly to 39.1% in 3Q24 from 38.5% in 2Q24. Its interest coverage ratio remained healthy at 3.26x in 3Q24, unchanged from 2Q24.

Likewise, the average cost of debt was maintained at 4.2%, unchanged from 2Q24. Frasers Centrepoint Trust has no debt that is due for refinancing in FY24. 

The asset enhancement initiative (AEI) at Tampines 1 is on track to be completed by September 2024, with 66 new-to-mall and 46 new-to-FCT retail concepts.

The mall has achieved 100% committed occupancy, and management expects the projected return on investment (ROI) to exceed its target of 8%, based on the enhancement cost component of S$31 million. 

Beansprout's take on Frasers Centrepoint Trust's 3Q24 operational 

The earnings are likely to be seen as neutral by investors. 

Fraser Centrepoint Trust's occupancy rate for its retail portfolio remains healthy despite the slight decline compared to the previous quarter. 

Its balance sheet also remains decent with a fairly high interest coverage ratio and limited near term debt maturity.

Fraser Centrepoint Trust currently trades at a price-to-book ratio of close to 1.0x, and offers a dividend yield of 5.4%. 

Dive deeper into the Frasers Centrepoint Trust with our checklist and find out if it may be worthwhile adding the REIT to your watchlist. 

To learn more about our outlook on Singapore REITs, read our detailed report on "Singapore REITs - Distributions may remain under pressure"

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Related links:

• Frasers Centrepoint Trust share price and share price target
• Frasers Centrepoint Trust dividend forecast and dividend history

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