Pure-play suburban retail mall REIT in Frasers Centrepoint Trust (SGX:J69U) published its business updates for the first quarter of the financial year 2021/22 ended 31 December 2021 after market hours yesterday (25 January 2022.)

At the time of writing, the REIT’s portfolio has a total of 10 properties – comprising of 1 office building (Central Plaza), and 9 retail malls spread across the different parts of Singapore (Causeway Point, Northpoint City North Wing, Changi City Point, Waterway Point, Tampines 1, Century Square, Hougang Mall, White Sands, and Tiong Bahru Plaza.)

As the REIT has switched to reporting its full financial results on a half-yearly basis, for the current quarter under review, they only provided a business update – and in this post, let us have a look at its portfolio occupancy and debt profile (where I’ll be taking the stats for the current quarter under review and compare them against the stats reported in the previous quarter 3 months ago – i.e. Q4 FY2020/21 ended 30 September 2021):

Portfolio Occupancy Profile (Q4 FY2020/21 vs. Q1 FY2021/22)

The following table is Frasers Centrepoint Trust’s portfolio occupancy profile as at the end of the first quarter of the financial year 2021/22 on 31 December 2021, compared against its portfolio occupancy profile as at the end of the fourth quarter of the financial year 2021/22 on 30 September 2021, where I seek to find out whether it has improved, stayed more or less the same, or deteriorated 3 months on:

Q4 FY2020/21Q1 FY2021/22
Portfolio Occupancy
(%)		97.3%97.2%
Portfolio WALE (by
(Net Lettable Area
– years)		1.6 years1.8 years
Portfolio WALE
(by Gross Rent – years)		1.6 years1.8 years

My Observations: Compared to the previous quarter, I must say that its portfolio occupancy profile have continued to remain resilient – with the overall portfolio occupancy remaining at a high percentage (the biggest drop in terms of its occupancy rate compared to the previous quarter was Central Plaza, where it fell by 20.1 percentage points to 71.7%, due to the exit of an anchor tenant.)

In terms of lease expiries, they are quite well-staggered, with an average of 20+% of the leases (by total leased area as well as by total gross rental income) will be expiring over the next 3 financial years (including the current one.)

Debt Profile (Q4 FY2020/21 vs. Q1 FY2021/22)

Just like how I have looked at the retail REIT’s portfolio occupancy profile in the previous section, in the table below, you’ll also find a comparison of its debt profile recorded for the current quarter under review against that recorded in the previous quarter 3 months ago:

Q4 FY2020/21Q1 FY2021/22
Aggregate Leverage
(%)		33.3%34.5%
Interest Coverage
Ratio (times)		5.1x4.8x
Average Term to
Debt Maturity (years)		2.5 years2.3 years
Average Cost of
Debt (%)		2.2%2.2%

My Observations: On the whole, the retail REIT’s debt profile when compared to the previous quarter seemed to have weakened slightly – however, despite of that, the REIT’s aggregate leverage, at 34.5%, still has plenty of debt headroom before the regulatory limit of 50.0% is reached (from 2022 onwards, REITs that are able to maintain their interest coverage ratio at above 4.8x will have its aggregate leverage capped at 50.0%.)

Looking at the REIT’s debt maturity profile over the next couple of financial years, its pretty well-spread out, with 11.1% (or S$211.0m) of its total borrowings expiring in the current financial year 2021/22, 20.6% (or S$391.0m) of its total borrowings expiring in FY2022/23, 27.5% (or S$521.0m) of its total borrowings expiring in FY2023/24, 27.7% (or S$524.0m) of its borrowings expiring in FY2024/25, and the remaining 13.1% (or S$247m) of its borrowings expiring in FY2025/26 and beyond.

Closing Thoughts

It’s good to note from the retail REIT’s business update that tenant sales in its malls have tracked close to pre-Covid levels in October and November 2021, and exceeded pre-Covid levels in December 2021.

In terms of its portfolio occupancy profile reported for the first quarter ended 31 December 2021, I felt that they have continued to remain very resilient – apart from Central Plaza (at 71.7%), Century Square (at 91.1%), Changi City Point (at 92.6%), and White Sands (at 92.5%), the remaining properties have managed to maintain their occupancy rate at about 95.0%.

The only slight negative (if I had to name one) would be its debt profile, which weakened slightly compared to the previous quarter ended 30 September 2021 – however, as I’ve also explained above, its aggregate leverage, at 34.5%, still has a very good debt headroom to go before the regulatory limit of 50.0% is reached, allowing the REIT to make further yield-accretive acquisitions as and when an opportunity to do so comes along.

Finally, as the REIT has switched to paying out a distribution on a half-yearly basis since the previous financial year, there are no distribution payouts declared for the current quarter under review.

Related Documents

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

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