<Operational Update> Frasers Centrepoint Trust 1Q22 – Steady as she goes
- Portfolio occupancy healthy at 97.2%
- Tenant sales continue to show suburban resilience at 100% – 106% of pre-pandemic levels in 1Q22
- Lease momentum remains robust with 23% of GRI up for renewal for 9M22
- Exit of mini anchors including office tenant at Central Plaza and Filmgarde at Century Square
- Maintain BUY with unchanged TP of S$2.90
Operational Update
Portfolio occupancy – steady as she goes
- Portfolio occupancy remains healthy at 97.2% and trended flat q-o-q.
- Central Plaza (commercial asset next to Tiongbahru Plaza) saw a c.20% drop in occupancies to 71.7% this quarter due to the exit of an anchor tenant.
- Occupancies across portfolio remains largely stable with a dip in occupancy at White Sands (-2.9 ppt to 92.5%) and Changi City Point (-2.1 ppt to 92.6%).
Front loading lease renewals ahead of CNY
- C.23.1% of leases by GRI will be up for renewal for the remaining 9M
- Bulk of the lease renewals will come from Tiongbahru Plaza (38% of mall NLA) and Century Square (25%)
- Leases from these assets constitute a mix of tenants, including mini anchors
- Both Century Square and Tiong Bahru is at a unique timing juncture – 3 year anniversary post AEI works, with chunkier lease expiries timed with completion. The higher portion of lease renewals also allows FCT greater flexibility in introducing tenants with better brand names or curating bigger retail plots to introduce more mini anchors such as Don Don Donki
- Filmgarde at Century Square will also be exiting the mall around 2H22. A replacement cinema operator will be considered for the plot. As a percentage of GRI, impact is minimal as overall cinemas (4 in total in whole portfolio) contribute to a small 2% to portfolio GRI and was no doubt one of the more affected trade sectors given capacity caps
Tenant sales surpassed pre-COVID levels in Nov and Dec
- Tenant sales remain healthy comparable to pre-COVID levels
- Tenant sales across Oct to Dec (100% to 106% of pre-COVID levels) has matched or surpassed pre-COVID levels with December a strong month at 106% of pre-COVID levels
- We anticipate a similar trend of higher spending towards Chinese New Year months January and February
- The deviation in shopper traffic at 54% to 66% of pre-COVID levels could be partially attributed to lower traffic alongside WFH default. With gradual reopening and workers returning back to office, transient traffic through suburban malls will likely see further improvement
FCT shopper traffic and tenant sales
A step forward on the ESG journey
- FCT has also newly established a Sustainable Finance Framework in Dec’21.
- Under this framework, a new target was set to increase green and sustainable financing by 2024.
- Gearing remains at robust levels at 34.5%, with a 5.8x interest cover (improvement from 5.1x end FY21), with a stable cost of debt at 2.2%.
Maintain BUY with unchanged TP of S$2.90