This morning, retail REIT Frasers Centrepoint Trust (SGX:J69U) held its virtual annual general meeting (AGM) for the financial year 2019/20 ended 30 September 2020, which I’ve attended as a unitholder to receive the latest updates from the REIT’s management.
For the benefit of those who did not attend, in this post, you’ll find a summary of the presentation by the REIT’s Chief Executive Officer (CEO), Mr Richard Ng, together with responses on some of the questions raised by fellow unitholders, and also results of the 3 resolutions put to vote during the meeting:
Presentation by CEO of Frasers Centrepoint Trust, Mr Richard Ng
Highlights of the REIT’s FY2019/20 Performance:
- The ongoing Covid-19 pandemic severely impacted the REIT’s performance for the financial year 2019/20, due to shops having to shut during the 2-month ‘circuit breaker’ period implemented by the Singapore government, along with rental rebates provided by the REIT to help the affected tenants. Its gross revenue fell by 16.3% on a year-on-year (y-o-y) basis to S$164.4m (FY2018/19: S$196.4m), while its net property income went down by 20.4% on a y-o-y basis to S$110.9m (FY2018/19: S$139.3m.)
- Despite of that, Mr Ng highlighted the REIT managed to maintain a stable portfolio valuation of S$2,857m (up by 0.4% on a y-o-y basis), and at the same time its net asset value and net tangible asset per unit saw a 2.7% y-o-y improvement to S$2.27. He added that the REIT’s overall financial position remained healthy and sustainable with a gearing level of 35.9% as at 30 September 2020.
Highlights of REIT’s Portfolio Post-Acquisition of AsiaRetail Fund Limited:
- Post-completion of the acquisition of AsiaRetail Fund Limited on 27 October 2020, Mr Ng shared that the REIT’s portfolio has a total of 11 suburban malls, with 2.3m sq ft of retail portfolio net lettable area, more than 1,500 retail portfolio leases, as well as a total of S$6.65b in assets under management. More importantly, post-acquisition, the REIT’s retail malls reaches out to 3.0m of catchment population, which is more than 50.0% of Singapore’s population.
- With the acquisition of AsiaRetail Fund Limited, Frasers Centrepoint Trust is now the second largest suburban retail mall owners in Singapore, with its share of suburban retail floorspace in Singapore by net lettable area at 10.2% (with the first being CapitaLand Integrated Commercial Trust, with its share of suburban retail floorspace in Singapore by net lettable area at 10.7%.)
- Finally, Mr Ng also shared that the REIT has a well-diversified portfolio in that no single property represents more than 22% of the REIT’s portfolio aggregate value.
- Mr Ng believes that adopting an omnichannel approach to retailing is the way to go moving forward. He added that the introduction of the Frasers Experience App offered their shoppers a new way to shop, dine, and play across the retail properties managed by Frasers Property Retail. The platform also allow the REIT’s tenants to extend their catchment and generate additional sales from online orders.
- Apart from that, Mr Ng shared that the REIT will constantly review the tenant mix of their retail malls to cater to what shoppers are looking for. Also, in time to come, he hopes that the REIT’s retail malls can once again become community hubs for family gatherings and social meetings when normalcy resumes after pandemic is over.
- In terms of the REIT’s future growth, Mr Ng shared that the REIT is open to acquiring retail properties, and embarking on asset enhancement initiatives in their existing malls at an opportune time, along with exploring other omnichannel and digital retail strategies to connect their shoppers with their retailers.
Responses to Questions Raised by Unitholders
- A unitholder asked about how the REIT intends to reposition itself to embrace changes brought about by the Covid-19 pandemic. Mr Ng shared that some retailers have made use of online platforms to generate sales during the ‘circuit breaker’ period. He added that the REIT also introduced the Frasers Experience App, which allow their retailers (especially those that do not have an online presence) to offer their products and/or services on the platform to Frasers’ customers. Moving forward, he said that the REIT will continue to explore using omnichannel platforms to bring retailers and shoppers together.
- Pertaining to a question on the recovery of the REIT’s mall traffic and footfall in Phase 3, Mr Ng updated that shopper traffic to the REIT’s malls have recovered to about 60% to 70% of pre-Covid levels. In terms of tenant sales, Mr Ng shared that they are very close to levels attained before the pandemic.
- Another unitholder was concerned about the challenges faced by the REIT given the proliferated use of e-commerce. In response, the Chairman of the REIT, Dr Cheong Choong Kong stressed the importance of adopting omnichannel strategies (he cited the implementation of the Frasers Experience App, which connects their shoppers with retailers together, giving the former another channel to shop, and giving the latter another source of income for their businesses) to stay relevant. He went on to say that the REIT will continue to ride with the trend and look to take advantage of on any possible opportunities available.
- On a question relating to plans to venture overseas, or plans to acquire other asset types such as offices, business parks, and data centres, Dr Cheong responded that the REIT will continue to be a Singapore-centric one, with their focus on suburban malls. He added that the REIT is continuously looking for opportunities to expand their portfolio of suburban retail malls, either from their Sponsor or from third-party.
Results of the 3 Resolutions Put to Vote during the AGM
- Resolution 1: To receive an adopt the Trustee’s Report, the Statement by the Manager, the Audited Financial Statement of Frasers Centrepoint Trust for the financial year ended 30 September 2020 and the Auditor’s Report thereon – The Resolution was passed with 99.98% of the votes for, and 0.02% of the votes against.
- Resolution 2: To re-appoint KPMG LLP as Auditors of FCT to hold office until the conclusion of the next Annual General Meeting, and to authorise the Manager to fix their renumeration – The resolution was passed with 99.97% of the votes for, and 0.03% of the votes against.
- Resolution 3: To authorise the Manager to issue Units and to make or grant convertible instruments – The resolution was passed with 93.36% of the votes for, and 6.64% of the votes against.
Disclaimer: At the time of writing, I am as unitholder of Frasers Centrepoint Trust.
Launch Event for My First Book: building your REIT-irement portfolio
After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.
I'm extremely thankful to the team at InvestingNote and ShareInvestor for their help to organise a book launch event for me on Tuesday, 26th September 2023, from 6:00pm to 8:00pm at their office in New Tech Park.
For more details and to RSVP (seats are extremely limited), click on the link below: