Frasers Commercial ( formerly Allco REIT )

Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Thu Jan 23, 2014 7:57 pm

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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
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Thu Jan 23, 2014 8:32 pm

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1Q14 DPU of 2.05 Scts for Frasers Commercial Trust (FCOT) is in line.

FCOT offers strong income visibility, while risk of AUDS$ is mitigated through forward hedges.

The expected expiry of the Alexandra Technopark’s (ATP) master-lease offers a significant upside to FCOT’s distributions come Aug’14.

At a FY14-15F CAGR of 7.0%, FCOT continues to offer one of the strongest growth profiles among its S-REIT peers.

FY14-15F prospective yields of 6.6%-7.2% remain attractive.

Maintain BUY with a target price of S$1.46.

Source: DBS
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Thu Jan 23, 2014 8:40 pm

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Results in line. FCOT’s Q114 performance is in line with our expectations, with revenue only 0.8% higher than our estimate and DPU of 2.05c forming 23% of our full-year forecast. Revenue for the quarter was marginally lower on a YoY basis. This was a result of the weaker Australian dollar and slightly lower occupancies for Central Park, which was partly cushioned by positive rent reversions and improved occupancies at 55 Market St and China Square Central (CSC).

Poised to achieve positive rent reversions. Underpinning our optimistic rent outlook, FCOT achieved another strong quarter of performance in occupancy and rent reversions. FCOT recorded an occupancy rate of 97.1% and rent reversions of up to 20.2%. Noting the recent opening of the Telok Ayer MRT station, we believe this enhances accessibility to CSC and could potentially improve CSC’s ability to fetch higher rents.

Majority of CPPUs redeemed. At present, 99.9% of the Series A CPPUs had either been converted or redeemed, leaving only approx. 0.2mil CPPUs outstanding. As the CPPUs are held at an interest cost of 5.5%, interest savings associated with the redemption of the CPPUs would provide another uplift to distributions.

Implementation of DRP. FCOT has introduced a distribution reinvestment plan that will be implemented for the distribution of Q114. Issue price of new units under the DRP for the Q114 distribution will be set at a 1% discount to the volume weighted average traded price per Unit for the market day following the Books Closure Date. This is expected to strengthen FCOT’s capital base and enhance its liquidity.

Reiterating our favourable investment thesis. Our investment thesis for FCOT remains centred on yield accretion arising from positive rent reversions, conversion of convertible perpetual preferred units (CPPUs) as well as the expiry of its master lease at Alexandra Technopark.

Maintain BUY on attractive forward yield of 7% and strong DPU growth upside (forecasted 14.1% growth).


Source: AmFraser
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Tue Mar 11, 2014 9:46 am

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Frasers Commercial Trust: Growth catalysts in sight

Frasers Commercial Trust (FCOT) has recently delivered a strong set of 1QFY14 results, on the back of distribution savings from its convertible perpetual preferred units (CPPUs).

For the rest of FY14, we expect FCOT to continue to benefit from the positive flow-through on its DPU.

Operationally, we are also positive on FCOT’s performance.

According to CBRE MarketView report, CBRE anticipates continued rental growth in the office market for the next two years amid limited office supply and tightening of available office space.

We see FCOT as the beneficiary of this potential market upturn, in view of its exposure to the Singapore office space. We maintain BUYand S$1.45 fair value on FCOT.


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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Thu Apr 24, 2014 7:10 pm

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Frasers Commercial Trust (S$1.295)
Q2 DPU rises 3% to 2.05¢

Frasers Commercial Trust (FCOT) posted a DPU of 2.05 cents for its 2Q ended March 31, 2014, a 3% increase while distribution to unitholders rose 5.6% year on
year to $13.789mil, despite a 5.8% fall in net property income to $21.7mil.

Income available for distribution to unitholders and CPPU holders was 10.3% lower at $13.792mil. As at end‐March, the trust registered an overall occupancy
rate of 97.5%.

FCOT's manager said it will implement the distribution reinvestment plan for the quarter. It provides unitholders the option to receive their distributions declared,
either in the form of units, or cash or a combination of both.

The Q2 distribution will be paid out on May 30, books close on May 2.

Source: AmFraser
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Sat Apr 26, 2014 9:51 am

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Frasers Commercial Trust: BUY; S$1.305; FCOT SP
CPPU savings boost distributions
Price Target : 12-Month S$ 1.46

• 1Q14 DPU of 2.30 Scts in line
• Alexandra Technopark operations continue to strengthen, more upside in store when master lease expires in Aug’14
• Maintain BUY, TP S$1.46


Highlights


2Q14 DPU of 2.05 Scts in line with expectations. Frasers Commercial Trust (FCOT) reported c.4% and c.6% y-o-y declines in gross revenue and NPI to S$28.6m and S$21.7m respectively. The slight dip in performance was mainly coming from a weaker AUD-SGD exchange rate and slightly lower occupancy at Central Park (c.94.1%), which was offset by higher rentals achieved for its China Square Central property following the refurbishment of its office tower.

Rental reversions for its office properties in Singapore have been strong, ranging from 6.4%-14.2%. Distributable income came in 5.6% higher y-o-y at S$13.8m, boosted by interest savings from lower all-in cost of 2.7% and lower CPPU distributions after redemption. DPU came in 3% higher y-o-y at 2.05 Scts due to a higher share base.


Our View

Minimal expiries in 2HFY14; risk of AUD-S$ is mitigated by forward hedges. FCOT continue to offer strong earnings visibility for FY14F with minimal expiries (c.3.9% to be renewed over the coming months after accounting for committed leases.

A majority of the lease expiries will be coming from China Square Central (1.8%) and Central Park (2.0%). We believe that earnings risks are manageable, given the small space left to be renewed.

In addition, low passing rents which are estimated at c.10-15% below market transaction levels are further buffers to earnings. FCOT attempts to minimise earnings volatility for its income from Australia through six-monthly forward hedges.


Underlying performance of Alexandra Technopark (ATP) continues to strengthen.

The expected expiry of the master lease presents significant upside to FCOT’s distributions come Aug’14, in our view. Underlying occupancies (rental income for the property remains high at 96.9% (up 0.3ppt q-o-q) and passing rentals strengthened to S$3.60 psf/mth.

Given the positive spread between underlying passing rentals (S$3.40 psf pm) vs implied master lease rent levels (estimated at a gross rent of S$2.90 psf pm), we forecast earnings growth to accelerate by 9.0% come FY15F.


Recommendation
BUY, TP S$1.46. At a FY14-15F CAGR of 7.0%, FCOT continues to offer strong growth prospects underpinned by the expiry of the master lease at ATP. FY14-15F prospective yields of 6.4%-7.0% remain attractive. Maintain BUY with TP maintained at S$1.46.


Source: DBS
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Mon Jun 02, 2014 5:07 pm

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We are most excited about Fraser Commercial Trust (FCOT), the group’s office/business park REIT, which will see strong pickup in rental income once the master lease at Alexandra Technopark expires in August and allow the group to enjoy market rents that are almost double of that under the master lease.

Source: DMG
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Wed Jun 04, 2014 6:55 pm

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Fraser Commercial Trust (FCOT) is a Singapore-based REIT investing primarily in office and business space in the region, sponsored by Fraser Centrepoint Limited (FCL).

The REIT currently owns and manages five properties with an asset base of SGD1.8bn.

We see multiple drivers for DPU growth for the REIT over the next 12 months, that could lift DPU as much as 30%:


1) Expiry of the master lease at Alexandra Technopark.

Alexandra Technopark was acquired from FCL in 2009 and came with a 5-year master lease that expires in August this year.

FCOT receives a net rent of SGD1.80 psf per month under the master lease but in the five years since the lease was signed, industrial rents have almost doubled, and today, market rents is in the vicinity of SGD3.60 psfpm.

After accounting for property expenses, FCOT could potentially enjoy a 50% uplift in NPI over the next 18 months, from the current SGD22m to SGD33m.


2) FCOT could also re-constitute its portfolio by selling its low-yielding 55 Market Street (NPI yield of 2.7%) and acquiring Alexandra Point, with NPI yield of 4-5%, from its parent. We estimate this could raise its NPI by SGD7m, or 8%.


3) FCOT has rights to build a hotel at its China Square Central property. Not being in the hotel business, we think it is likely to sell this right to either its parent or a third party. And based on a residential landcost of SGD500 psf, the rights could generate proceeds of SGD85m for the 170,000 sq (GFA) site. This could be used to fund the shortfall in cash required from swapping 55 Market Street for Alexandra Point.

We estimate the above moves could lift FCOT’s DPU from the current 8.3 cents (6.1% DPU yield) to as high as 11.0 cents (8% DPU yield) over a 18-month period. On a 7% required yield, the stock could hit SGD1.54, translating to capital gains of 14%. This, coupled with dividend yield of 7+%, offers investors a total return of 21%.


Source: DMG
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Tue Jul 22, 2014 10:14 am

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Frasers Commercial Trust: Further growth ahead

Frasers Commercial Trust (FCOT) reported 3QFY14 DPU of 2.19 S cents, flat YoY. This brings the 9MFY14 DPU to 6.29 S cents (+9.2%), consistent with our expectations.

We note that leasing activity has remained very robust during the quarter. Looking ahead, FCOT shared with us that it will continue to focus on maintaining the high occupancy rates across the portfolio and refinancing its maturing debts.

It also reiterated that the upcoming expiry of the master lease at Alexandra Technopark in Aug 2014 will further boost the portfolio performance as the average underlying gross rent is twice the net rent received under the master lease.

We make some adjustments to our forecasts to reflect a firmer portfolio going forward.

Our fair value is raised marginally from S$1.45 to S$1.48. Maintain BUY on FCOT.

Source: OCBC
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Re: Frasers Commercial ( formerly Allco REIT )

Postby winston » Wed Sep 17, 2014 2:03 pm

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Frasers Commercial Trust: Another milestone attained

Frasers Commercial Trust (FCOT) announced earlier this week that it has entered into agreements with a club of banks for transferable term loan facilities to refinance its entire existing borrowings.

We view this as a major positive move given that all the new facilities will be unsecured and that the debt maturity profile will be significantly enhanced.

For the year ahead, we remain positive on FCOT’s performance.

Apart from benefitting from the recovery in the Singapore office market, we note that the master lease at Alexandra Technopark has expired last month and that FCOT is poised for strong rental uplift with the direct management of the property.

Maintain BUY with an unchanged fair value of S$1.48 on FCOT.

Source: OCBC
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