vested
Frasers Commercial Trust: Cranking up further growth
Summary: Frasers Commercial Trust’s (FCOT) 1QFY14 DPU of 2.05 S cents (+29.7% YoY) was within our expectations.
China Square Central and 55 Market Street were the key performers for 1Q, raking up NPI growth of 15.4% and 9.6% respectively on the back of higher secured rental and occupancy rates.
Domestic leasing demand also remained relatively buoyant in our view, as positive rental reversions ranging from 10.7% to 20.7% were achieved during the quarter.
Looking ahead, management continues to maintain its positive tone, highlighting that its under-rented portfolio assets and current occupancy rate provide room for further income growth.
At Alexandra Technopark, we note that FCOT is currently receiving S$1.80 psf pm net rent for the master lease (vs. S$3.40 gross rent for underlying leases). Given that the master lease makes up a significant 21.7% of FCOT’s rental income, we are thus positive on its performance in FY14.
Maintain BUY with unchanged fair value of S$1.45 on FCOT.
Source: OCBC