FCT has released its 1Q 19 results today.
DPU came in at 3.02 cents.
At today's trading price of $2.26, it offers 1.33% dividend
for 1 quarter.
The Positives
1Q 19 vs 4Q 18
|
Gross Revenue( $ millions)
|
1Q 19
|
4Q 18
|
% Change
|
|
Causeway Point
|
21.76
|
21.53
|
1.07
|
|
Northpoint City North Wing
|
13.51
|
13.02
|
3.76
|
|
Changi City Point
|
6.83
|
6.92
|
-1.30
|
|
Yew Tee Point
|
3.55
|
3.45
|
2.90
|
|
Anchorpoint
|
2.11
|
2.04
|
3.43
|
|
Bedok Point
|
1.52
|
1.55
|
-1.94
|
|
Total
|
49.28
|
48.51
|
1.59
|
1Q 19 vs 4Q 18
|
Net Property Income( $ millions)
|
1Q 19
|
4Q 18
|
% Change
|
|
Causeway Point
|
16.84
|
15.44
|
9.07
|
|
Northpoint City North Wing
|
10
|
9.11
|
39.77
|
|
Changi City Point
|
4.51
|
4.41
|
2.27
|
|
Yew Tee Point
|
2.47
|
2.29
|
7.86
|
|
Anchorpoint
|
0.94
|
0.89
|
5.62
|
|
Bedok Point
|
0.62
|
0.73
|
-15.07
|
|
Total
|
35.39
|
32.87
|
7.67
|
- From the 2 tables above, we can see that Quarter on Quarter ("qoq") net property income has improved by 7.6%. With the exception of Bedok Point, the rest of the areas have seen improvements throughout. This is definitely a positive for the reit.
- Another positive for the reit will be its improving mall occupancy rates throughout all malls. Anchorpoint and Bedok Point in particular have improved their mall occupancy by 6.2% and 5% respectively
The Concerns
- Northpoint City North Wing has recorded a negative rental reversion of -1.3%. This definitely is puzzling given that it has just underwent AEI. Even though in 3Q 18 (April 2018 to June 2018) rental reversions went up by 25.8% followed by 0.5% in 4Q 18, it seems like the positive rental reversions might have come to a halt. Coupled with 11.8% of gross rent to expire in FY 2019, it remains to be seen if gross revenue would exceed $52.21 million in 2018.
- Anchorpoint records 3 consecutive quarters of negative rental reversions. While not a big mall under its portfolio, -32.8% in 3Q 18 followed by -10.4% in 4Q 18 and -12.1% in 1Q 19 would not be pleasing news to any investors. Coupled with 16 leases accounting for 43.1% of gross rent expiring in FY 19, future negative reversions would reduce the net property income from Anchorpoint further.
- While not an observation from 1Q 2019 results, I have realised that the capitalisation rate has decreased in the 4Q 2018results(Slide 19) when compared to 4Q 2017. Assuming everything else is constant, a lower capitalisation rate results in higher valuation and this would affect net asset value .
What to lookout for in future results
·
Causeway Point's rental revision. In 1Q 19,
11.1% positive rental reversion is achieved. With 22.1% of gross rent of mall
to expire in FY 2019, a double digit rental revision would definitely drive top
and bottom-line.
·
Interest rate of refinancing. With $222 million
or 27.1% of total borrowings to be refinanced this year, it would be
interesting to see the new cost of borrowing after the loans have been refinanced.
Fun Fact
- FCT has the lowest average cost of borrowings at 2.7% when compared to other reits such as SPH REIT(2.8%),Mapletree Commercial Trust(2.93%) and Capitaland Mall Trust(3.1%)
