Fraser Centrepoint Trust

Fraser Centrepoint Trust

Postby winston » Wed Jun 11, 2008 2:19 pm

Not vested. From CIMB:-

Fraser Centrepoint Trust (S$1.28) – Initiating coverage - Holding fort North FCT is a retail REIT with three suburban retail properties concentrated in the north region of Singapore.

Supported by sponsor Fraser Centrepoint Ltd, FCT is poised for growth via acquisitions and growth in retail rents. We expect FCT to acquire S$480m of properties from 2008 to 2010. In addition, retail rents are expected to increase by up to 45% over preceding rates over the same period, on the back of tight supply and ongoing asset enhancements.

Based on DDM valuation (discount rate 8.5%), we have a target price of S$1.70, which offers a total prospective return of 38.3% from a forward yield of 5.5% and potential price upside of 32.8%.

Initiate with Outperform.
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Re: Fraser Centrepoint Trust

Postby winston » Thu Jul 24, 2008 12:23 pm

Singapore Hot Stocks-Frasers Centrepoint up on Citi upgrade

SINGAPORE, July 24 (Reuters) - Shares of Frasers Centrepoint Trust jumped as much as 7 percent to hit a four-week high after it reported strong quarterly earnings growth and Citigroup upgraded the stock to "buy" from "sell".

Frasers Centrepoint, a property trust managed by conglomerate Fraser and Neave , rose to a high of S$1.23.

The trust reported a rise of 19 percent in distributable income for the fiscal third quarter ended June 30 to S$12.2 million from S$10.3 million. Distribution per unit for the same period climbed 12.6 percent to 1.88 Singapore cents from 1.67 Singapore cents a year ago.

Citibank analyst Ian Chua upgraded Frasers Centrepoint to "buy" with a target price of S$1.30, up from SS$1.29 previously.

"Frasers Centrepoint's third quarter tends to be seasonally weaker, but better cost management at Causeway Point and Northpoint led to an overall smaller net property income decline (quarter-on-quarter)," Chua said.

The stock has fallen about 14 percent in the past seven weeks, offering a 6.6 percent yield based on earnings per share estimates of financial year 2009 at current levels, said the Citigroup research note.

Source: Reuters
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Re: Fraser Centrepoint Trust

Postby winston » Thu Jul 24, 2008 7:30 pm

Not vested.

CIMB cuts target price to S$1.49 (from S$1.70)

DBS cuts target price to S$1.34 (previously S$1.56)

Credit Suisse lifts target price to $1.57 (from $1.56)
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Fraser Centrepoint Trust - Analyst OCBC

Postby ishak » Fri Aug 22, 2008 12:03 pm

Safety in the suburbs
22 Aug 2008

We are resuming coverage on Frasers Centrepoint Trust (FCT). We like its malls’ mass-market consumer focus as well as their strategic locations and captive markets. FCT is currently conducting asset enhancement works at Northpoint and expects average rentals to increase 17% after works are completed in 3Q09. FCT is ready to realize its sponsor-driven pipeline over the next two years but our major concern here is the lack of clarity about the timing and process of executing the portfolio expansion. We like FCT but we believe it is fully valued at current price levels. We resume coverage on FCT with a HOLD rating and fair value estimate of S$1.20.

Safety in the suburbs. We are resuming coverage on retail S-REIT Frasers Centrepoint Trust (FCT). We believe that its suburban assets – Causeway Point, Northpoint, and Anchorpoint – are an interesting low beta play in the current uncertain economic environment. We note that occupancy levels have generally held during previous crises and we like the malls’ mass-market consumer focus. These properties are strategically located adjacent to MRT stations and bus interchanges, and enjoy captive markets with strong population catchments and limited alternative shopping choices. FCT also owns a 31.06% stake in Malaysian Hektar REIT [RM 1.03, Not-rated] whose retail assets enjoy a similar profile.

Asset enhancement focus. Since its July 2006 listing, FCT’s focus has been on extracting value from its existing portfolio. Asset enhancement works at Anchorpoint over 1Q07 – 1Q08 (year ending Sep 30) yielded a 41% jump in average rentals from S$5.32 psf per month to S$7.50 psf pm. Northpoint is FCT’s current target and management expects average rentals to increase 17% from S$11 psf pm to S$12.91 psf pm after works are completed in 3Q09. FCT’s largest property Causeway Point is next in line but details have yet to be announced.

Strong pipeline but financing a concern. FCT is ready to realize its sponsor-driven pipeline over the next two years. First in its sights is the 83,000 sf extension to Northpoint. Management has told us that 96% of Northpoint 2 is committed or in advanced stages of negotiations. Both the extension and the YewTee Mall could potentially be injected into the REIT in the next 6-9 months. Our major concern here is the lack of clarity about the executing of the portfolio expansion – the timing, pricing, financing and consequently, accretion. FCT is currently geared at a comfortable 29% and could ostensibly absorb Northpoint 2 on debt only. However, we believe a fresh equity injection will be necessary to fund subsequent buys, adding another layer of uncertainty.

Fully valued – resume with HOLD. FCT is trading at a FY09F DPU yield of 5.8% (existing portfolio), which we find expensive versus other S-REITs. We like FCT but we believe it is fully valued at current price levels. The various uncertainties attached to acquisitions make us wary of awarding a premium to S-REITs for future external growth. The counter’s low liquidity arising from a small size and high sponsor ownership is another concern in a bear market. We resume coverage on FCT with a HOLD rating and S$1.20 fair value estimate.
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Re: Fraser Centrepoint Trust

Postby winston » Mon Jan 12, 2009 4:05 pm

From CIMB:-

Frasers Centrepoint Trust (S$0.71) - Taking stock

A recent site visit to FCT’s three properties shows occupancy remaining full with the exception of Northpoint which is undergoing asset enhancement. Shopper traffic was strong at Causeway Point. Despite a negative macro environment, we are positive that rents and occupancy for FCT’s suburban malls will stay stable in FY09, on the back of no significant new supply in the suburbs, limited lease
expiries in 2009 and stepped-up rents incorporated in 86% of its leases.

We provide for a sharper decline in occupancy to 70% from 95% in anticipation of more rent-free periods or rebates which may be given to new tenants. Our DPU estimates decline by 5.1-5.3% for FY09-10. Still using DDM valuation, we have a lower target price of S$1.06 (from S$1.13). At 0.6x P/BV, FCT remains a cheaper exposure to Singapore’s retail market than CMT. Maintain Outperform.
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Re: Fraser Centrepoint Trust

Postby millionairemind » Mon Mar 16, 2009 8:26 pm

March 16, 2009

Moody's confirms FCT's Baa1 rating; outlook negative
By ANGELA TAN

Moody's Investors Service on Monday confirmed the Baa1 corporate family rating of Frasers Centrepoint Trust ('FCT').

The outlook for the rating is negative.

This concludes the review for possible downgrade initiated on October 20, 2008.

'The rating confirmation reflects FCT's good franchise value and relatively stable income stream supported by its well-located suburban retail assets. In Moody's opinion, these assets are at the lower end of the asset risk spectrum as they mainly provide tenants with non-discretionary household items,' says Kathleen Lee, a Moody's VP/Senior Analyst and lead analyst for the trust.

'The confirmation also factors in the trust's manageable debt maturities and with banks with good relationships with its sponsor, Fraser Centrepoint Ltd ('FCL'), to facilitate gradual conversion of its short-term debts to term and/or committed banking facilities, which will support its ongoing capital expenditure needs,' says Lee.

'FCT's conservative financial policy also generates good credit metrics relative to its peers -- - as reflected by Debt/EBITDA of 6x -7x and EDBITA/Interest coverage of 3.4x -4.5x,' she adds.

The outlook for the rating is negative reflecting the trust's asset concentration exposing it to the weak economic environment and property market conditions in Singapore. Furthermore, these conditions render uncertainties in the level of tenant occupation and achieved rentals at Northpoint upon completion of the renovation works expected by 2Q2009.

A return to a stable outlook is unlikely at this stage given the inherent weaknesses in the trust's operating profile and its limited financial flexibility amid the weak operating environment.

Conversely, the ratings could face downward pressure if progress is not made in securing committed medium-term bank facilities to fund the trust's ongoing capital expenditure over the next few months, and/or should headroom in its unitholders' funds covenant fall away due to material asset impairments or worse than expected rental or occupancy conditions.

In addition, the rating could be lowered if financial metrics weaken such that the trust's Debt/EBITDA increases above 6.5x and interest coverage falls below 4x.

The last rating action with regard to FCT was taken on December 1, 2008, when its Baa1 rating was placed on review for possible downgrade.

Source: Business Times Singapore
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Re: Fraser Centrepoint Trust

Postby millionairemind » Fri Jun 12, 2009 8:41 am

Frasers Centrepoint Trust
June 11 close: $0.91
OCBC INVESTMENT RESEARCH, June 11

FCT up sharply year-to-date (YTD). Frasers Centrepoint Trust (FCT) is up 51 per cent YTD and is now trading at 0.74x book. A buy rationale at this price level implies, in our view, expectations of growth either through the re-rating of existing assets, which we don't see much economic evidence for, or through value-accretive acquisitions.

Opportunity in pipeline. FCT is comfortably geared at 29.7 per cent. It also does not have to look far for potential deals: recall that FCT has a pipeline of four retail malls from sponsor Fraser & Neave under a right of first refusal (ROFR).

We believe the ROFR, which expires in 2011, has been a key investment driver for FCT. FCT's acquisition plan is currently suspended due to difficult market conditions.

At the Q2 briefing, the manager commented on the divide between the physical market and S-Reit valuations. FCT's price has increased 30 per cent since then, and it is now trading at a FY 2009F yield of 7.5 per cent.

Northpoint 2 most compelling. Among the ROFR assets, we find Northpoint 2 most compelling because of the small deal size and its synergy with an existing asset - Northpoint.

The asset is close to 100 per cent leased. A put and call option agreement with a price range of $139.5 million-$170.5 million is in place. The agreement expires in December 2009. If 100 per cent debt funded, buying Northpoint 2 would increase FCT's gearing to about 42-45 per cent.

But stumbling blocks, still. Note this pricing range is roughly equivalent to a 12 per cent discount to 8 per cent premium on Northpoint's September 2008 valuation. This is not a very attractive deal, in today's context. We think the market may be more receptive to a 'cheaper' deal; a desire Fraser & Neave may have no interest in accommodating.

The deal structure itself also promises to be complex - if the buy is not 100 per cent debt-funded, Fraser & Neave may need to do its part as a 51 per cent stakeholder. This holds even if FCT goes for potentially lower priced third-party assets.

A potential solution is a cash-and-shares deal on a pipeline asset, sidestepping the need for a large cash call. But financing acquisitions may not be a top priority for Fraser & Neave, especially when sibling Frasers Commercial Trust presents a more pressing case for sponsor support.

As such, we believe a 'buy' call is yet to be justified on FCT. Our fair value estimate rises to $0.75 (previously: $0.62) as we relax our discount rate to reflect a lower cost of equity. Maintain 'hold' on valuation grounds.
HOLD
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Re: Fraser Centrepoint Trust

Postby winston » Mon Sep 28, 2009 2:23 pm

Not vested. From DBS:-

DBS Research has upgraded the target price for Frasers Centrepoint Trust to S$ 1.25 (Prev S$ 1.13). FCT has a resilient suburban portfolio, with two pronged re-rating catalyst from improving size and liquidity to drive growth.
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Re: Fraser Centrepoint Trust

Postby winston » Mon Oct 05, 2009 4:11 pm

Not vested. From DMG:-

Frasers Centrepoint Trust: Acquisitions: New engine for growth
(BUY\S$1.14\Target S$1.53)
Jonathan Ng (62323893, [email protected])

Maintain BUY for its defensive strengths.
Since July, FCT has been one of the best S-REIT performers with yields compressing by 100bps. We believe the major reason is that FCT is one of the most defensive plays among other REITs. Apart from its low stock beta (0.7x), FCT’s well-positioned portfolio of suburban retail assets offer a high degree of stability in terms of occupancies and cash flows.

Its anchors are primarily dominated by non-discretionary retailers with an eclectic mix concentrated towards F&B and mass-market merchandising. We are raising our TP to S$1.53 from S$1.17.

New asset injection will raise AUM by 28%.
Our discussion with management yesterday was largely centred on its acquisition plans. We expect Northpoint 2 and YewTee Point to be acquired within the next 12 months. We value both assets at ~S$300m, with NPI yields averaging between 5.7-6.1%, above its WACC cost of 5.2%. With the acquisitions, FCT’s AUM will grow by 28% to S$1.4b by end-2010.

FCT has a robust balance sheet with no debt due for refinancing until Jul 2011 when its S$260m CMBS matures. Its S$58m RCF will be paid down using its MTN proceeds, bringing overall gearing to 29.5%. With a current equity cost of 6.2%, we believe acquisitions will likely be funded using both debt and equity. We understand that secured debt has an interest cost of ~3.8%. We estimate a 50:50 equity/debt combination will improve DPU yield by 40-60bp, whilst lifting gearing to only 32.4%.

Target price lifted to S$1.53.
The acquisition of these malls is expected to be accretive and will strengthen FCT’s retail oligopoly status in the northern region of Singapore. With an expanded AUM and equity base, concerns over FCT’s poor stock liquidity will be addressed. We expect a further re-rating on the stock as yields could compress closer to its 5% heyday levels seen in 2006-08.

Our new TP accounts for the two acquisitions based on the above assumptions. We raise our terminal growth to 2.5% from 1%, considering that these assets have an annual 2-3% step-up rent agreement. At our TP, FCT trades at 5.5% FY11 yield, a reasonable peg, in our view.
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Re: Fraser Centrepoint Trust

Postby winston » Fri Oct 23, 2009 2:21 pm

Not vested. From OCBC:-

Frasers Centrepoint Trust: DPU up 5% QoQ as tenants return to Northpoint

Summary: Frasers Centrepoint Trust (FCT) posted a 17% QoQ increase in 4Q revenue to S$24.8m and a 19.6% QoQ increase in NPI to S$17.6m. The strong performance was on the back of increased contributions from Northpoint, where asset works came to a close.

DPU of 2.04 S cents for the quarter was 3% higher than our 1.98 S cents estimate. FCT booked a revaluation surplus of S$37m this year despite a cap rate expansion. The manager was upbeat and made its intentions to acquire part of its pipeline crystal clear.

We increase our fair value estimate to S$1.30 from S$1.22 due to revisions to our fund-raising assumptions. FCT has appreciated 11.6% since our September upgrade but we still see value in the current price. Maintain BUY, with 10.7% total return. (Meenal Kumar)
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