FCT distributable income up 15%

Q1 gross revenue up 19.6%, with net property income surging 24%

FRASERS Centrepoint Trust (FCT) reported a distribution per unit of 1.91 cents for its first quarter ended Dec 31 2009, a 14.4 per cent increase from 1.67 cents for the corresponding period a year ago, in line with analysts’ estimates.

Its distributable income rose 15.1 per cent from $10.4 million to $12 million for the same periods.

The group’s gross revenue saw a 19.6 per cent gain from the same period in 2008 to $23.3 million, which in turn sent net property income for the quarter surging 24 per cent to $15.9 million, driven by improvement in revenue from the Northpoint enhancement works.

Property expenses for the quarter rose 10.6 per cent over the previous year’s to $7.4 million, mostly due to the increase in property tax.

‘FCT maintained strong operational momentum with portfolio occupancy rising to 98.6 per cent as Causeway Point registered full occupancy as at December 2009,’ said DMG & Partners Securities analyst, Jonathan Ng, in his report yesterday.

Mr Ng had maintained his ‘buy’ call on the stock with a target price of $1.66, implying a 5 per cent yield at fair value.

‘Rental renewals remained strong, with a total of 10 leases renewed at an average of 4 per cent increment above preceding rental rates. Occupancy costs in FCT’s malls remain healthy, with tenants at Causeway Point and Anchorpoint registering average occupancy costs of 13.4 per cent and 16.2 per cent respectively as at Nov 2009, well in line with market benchmarks,’ Mr Ng added.

For the quarter, net income rose 19.7 per cent from $8.4 million to $10.1 million.

The group’s total return after tax, however, surged 89.5 per cent from $5.8 million to $10.9 million, mainly because of a 90 per cent decrease in unrealised fair value losses in derivatives.

FCT’s proposed acquisition of Northpoint 2 and YewTee Point, approved during its extraordinary general meeting yesterday, and slated to be completed before July, will stand it in good stead, credit rating-wise, according to DMG’s Mr Ng.

‘Apart from the accretion FCT will enjoy from these acquisitions, we believe the injection of the two assets may improve FCT’s credit rating as its asset-concentration risks will substantially be reduced with income contributions from Causeway Point dropping from 64 per cent to 51 per cent,’ said Mr Ng.

FCT’s unit price fell 3 cents in trading yesterday, closing at $1.40.

Source: Business Times, 26 Jan 2010