With a financial year ended 30 September 2024 (FY2023/24), Frasers Centrepoint Trust (SGX: J69U) released its annual report, as well as its notice of annual general meeting (AGM) just before Christmas last year (23 December 2024) – as I was away on vacation during the period, I only had a look at it when I'm back and hence, the delay in this post.

For those who are new to the REIT, a quick introduction – listed since July 2006, Frasers Centrepoint Trust (FCT) is one of the few REITs in Singapore with all its properties located in Singapore. As at the end of FY2023/24, its portfolio comprises 9 retail malls (including Causeway Point, Tampines 1, Northpoint City North Wing [including Yishun 10 Retail Podium], Tiong Bahru Plaza, Century Square, Hougang Mall, White Sands, as well as a 50% interest in NEX and Waterway Point), as well as one office property (Central Plaza), valued at approximately S$7.1 billion.

Here's a summary of some of the key highlights from FCT’s latest annual report, together with information about its upcoming AGM:

Summary of FCT's Annual Report

Review of FY2023/24 Performance:

• Gross revenue and net property income were down by 4.9% and 4.6% year on year to S$351.7 million and S$253.4 million respectively due to lower contribution from Changi City Point which was divested in October 2023, and lower contribution from Tampines 1 during its AEI works [for information, works has been completed in August 2024, with the AEI achieving a return on investment greater than the target of 8% on capital expenditure of S$38 million]. Excluding these two factors, FCT's gross revenue and net property income would have been up by 3.5% and 3.4% year on year, respectively, contributed by higher physical occupancy, higher passing rents, and staggered rental across most malls.
• Distribution per unit (DPU) inched down by 0.9% year on year to 12.042 cents, due to a larger base of total issued and issuable units compared to the previous year [from a fund raising exercise in January 2024 to partially fund for the additional 24.5% interest in NEX], and lower net property income.
• Appraised value of FCT's portfolio saw a 1.2% uplift to approximately S$7.0 billion – with all malls recording a stable or slight improvements in their appraised values.
• Portfolio committed occupancy stood at 99.7% (unchanged from last year), with rental reversion at +7.7% (compared to +4.7% the year before). All malls recorded a positive rental reversion of between 4.0% and 8.8%. Portfolio shopper traffic and tenant sales grew by 4.2% and 1.2% year on year respectively.
• Top 10 tenants contributed 19.3% towards the REIT's total GRI, with no single tenant contributing more than 5.8%.
• Debt profile is as follows: Aggregate leverage at 38.5%, interest coverage at 3.41 times, average all-in cost of debt at 4.1%, with 71.4% of debt hedged to fixed rate interest, and average debt maturity at 2.6 years.

Update on FCT's ESG Journey:

• FCT achieved 5-Star rating in the 2024 GRESB Real Estate Assessment for the 4th consecutive year in FY2023/24 with a total score of 91 (down slightly from a total score of 92 last year), as well as an "AA" rating from MSCI ESG Research in 2024 (an improvement from the "A" rating in the previous year).
• One of the ESG-related projects rolled out include Singapore's first-of-its-kind food waste valorisation system (where food waste is transformed into commercial grade fish feed using reactive oxygen technology developed by the REIT's technology partners) across 5 of its properties in its portfolio – which will potentially reduce 2,200 tonnes of food waste and 660 tonnes of carbon emissions. FCT plans to extend this program to other portfolio malls in time to come.
• FCT has partnered with SP Group to complete the solarisation roll-out for 6 of its malls, as well as a commercial property owned by another Frasers Property-related entity during the financial year – and this is Singapore's largest single solarisation roll-out for retail malls. This project is projected to save about S$153,000 in energy costs and 293 tonnes of carbon emission annually by the REIT.

Looking Ahead:

• FCT will be embarking on an AEI at Hougang Mall from the 2nd quarter of calendar year 2025, and projected to complete in the 3rd quarter of calendar year 2026. Worth S$51 million, the AEI aims to create a refreshed retail experience with the introduction of new retail brands and services, space re-configuration and unlocking of value, with the projected ROI at approximately 7%.
• On the potential impact caused by the Johor Bahru-Singapore Rapid Transit System scheduled to commence in end-2026 on Singapore's retailers and mall operators as more Singaporeans could choose to spend and dine in Johor Bahru given the strength of the Singapore dollar, the management is of the opinion that the upside opportunities from the upcoming developments and increase in working population and residential catchment in the North Region (particularly, the Singapore Government has announced plans to build a total of 42,600 new homes over the near- and long-term) will outweigh the downside risk from the retail sales loss to Johor Bahru.
• For the financial year ahead, FCT's management expects interest rate movements (in this regard, they expect the REIT's average cost of borrowings to remain around the low-4% level) and the increase in operating expenses (on this, the management will continue to drive cost optimisation initiatives for its operations and adopt appropriate hedging strategies for energy contracts to mitigate the impact to its utilities expenses) to remain the key factors affecting the REIT's performance.

Details of FCT's 18th AGM

When? Tuesday, 14 January 2025
Where? Grand Ballroom, Level 2, InterContinental Singapore, 80 Middle Road, Singapore 188966
Time? 10am

For those who have their units in their CDP account, you can just proceed to the meeting (no pre-registration necessary, as verification will be done on the spot).

For those who have their units held in a custodian account, you will need to send a message to your brokerage to appoint you to attend the meeting as a proxy.

The meeting will be held in a wholly physical format, with no option for unitholders to attend virtually.

Closing Thoughts

On the whole, it was a stable set of performance reported by FCT in terms of its financial performance, portfolio occupancy, and debt profile.

Headwinds related to higher borrowing costs, as well as higher utilities expenses is something that all the REITs will experience. However for the former, with the US Federal Reserve having already cut interest rates by 1% in 2024 (by 0.5% in September, as well as by 0.25% in November and December), we should see borrowing costs starting to come down in the coming financial year ahead, which could potentially equate to some improvements as far as distribution payouts are concerned.

With that, I have come to the end of my post on the summary of FCT's latest annual report for FY2023/24. As always, do take note that all the opinions you find in this post are purely mine which I'm sharing for educational purposes only. They are not meant as any buy or sell calls for the REIT's units, and you are strongly encouraged to do your own due diligence before making any investment decisions.

Related Documents

• Annual Report
• Circular to Unitholders
• Notice of AGM
• Proxy Form
• Notification & Request Form

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

The post Frasers Centrepoint Trust's Annual Report for FY2023/24 - Key Highlights to Take Note of first appeared on The Singaporean Investor.