Fraser keen to buy Malaysia malls

FRASERS Centrepoint Trust (FCT) said yesterday it is confident of maintaining historical revenue growth rates and is looking to buy malls in Malaysia to diversify its business.


FCT, which owns four suburban malls in Singapore, recorded compounded gross revenue growth of 7.5 per cent per annum since listing in 2006. During this period, distribution to shareholders rose by an average of 5.7 per cent per unit each year.

'Looking at revenue trends and looking at rental reversions, in general, we think that this is quite a sustainable trend,' chief executive Chew Tuan Chiong said when asked if growth was sustainable.

'There was growth even during the downturn and right now, things are looking bright,' he told Reuters in an interview.

He said rental income from existing malls could rise as rents at its properties are below the market average, although he added that FCT preferred to 'put less pressure' on tenants.

The property trust recently refurbished one of its malls called Northpoint, which is already benefiting from a higher stream of rental income. Rents at Northpoint have risen by about 20 per cent since the renovations, he said.

Most analysts have a 'buy' recommendation on FCT, favouring it over rivals such as CapitaMall Trust and Suntec due to the greater potential for rent increases.

FCT will also benefit from the likely injection of new properties by parent Fraser and Neave , a property, beer and soft drinks conglomerate.

OCBC, for example, predicts FCT could raise rents at Causeway Point, the trust's largest property, to S$13-S$14 per square foot per month from S$11-12 psf/month through asset enhancement.

Mr Chew, who joined FCT in March this year, said the trust will buy malls with stable income streams from its parent company as well as seek acquisitions from third parties.

'We are quite interested in Malaysia because we have very similar operations parameters,' he said.

FCT already owns a 31 per cent stake in Hektar Reit, a Malaysian-listed Reit, and Mr Chew said the Singapore property trust is prepared to invest directly in Malaysian malls.

Mr Chew said FCT plans to stay focused on Singapore suburban malls as they command steady rents unlike swankier malls along the Orchard Road shopping belt that depend a lot on tourism. -- Reuters

Source: Business Times, 7 May 2010