FCOT Q3 distributable income falls 23.9%

Factors include lower revenue and higher finance costs

FRASERS Commercial Trust (FCOT) has reported a 23.9 per cent fall in third-quarter distributable income to $6.1 million, dragged down by lower revenue and higher finance costs. Distribution per unit – after adjustment for rights units – slipped to 0.2 cents per unit from 0.27 cents.

For the three months ended September, gross revenue dipped 3.4 per cent to $25.7 million. This was mainly due to revenue declines in KeyPoint, Japan’s Cosmo Plaza and Australia’s Central Park. In particular, Cosmo Plaza had lost a major tenant, while takings from its Australian properties were affected by the weakening of the Australian dollar and expiry of leases. However, the loss of revenue was partially offset by a $2.2 million contribution from Alexandra Technopark, which was acquired in August.

Property operating expenses went down 11.9 per cent to $5.7 million. This resulted in a net property income of about $20 million, little changed from the same quarter last year. Finance costs, however, went up 15.8 per cent to $12.7 million due to higher borrowing costs. ‘Under terms of the debt facilities extension negotiated in 2008, the interest margin of these facilities increased with effect from 1 July 2009,’ the trust’s manager Frasers Centrepoint Asset Management said.

FCOT’s portfolio consists of ten properties spanning Singapore, Japan and Australia. As at Sept 30, their combined asset value amounted to $1.9 billion.

‘For the coming year, management will seek to improve the portfolio through asset enhancement initiatives for some of the properties,’ said Low Chee Wah, CEO of the trust’s manager. ‘This, along with rigorous expense control and proactive tenancy management, will be key to lifting portfolio performance in the coming periods.’

For the first nine months, distributable income was $17.1 million. Gross revenue was $72.3 million. The trust has changed its financial year end to September, from December. Unitholders will receive the distribution of 0.20 cents on Nov 26. Distributions will resume to half-yearly payment from the end of the first half of FY2010. FCOT was last traded 15.5 cents.

Source: Business Times, 24 Oct 2009