Frasers Centrepoint Trust Delivers Strong 1Q25 Performance Amid Positive Retail Trends

Frasers Centrepoint Trust (FCT), Singapore’s leading suburban retail Real Estate Investment Trust (REIT), has announced a robust performance for the first quarter ending 31 December 2024. With strong leasing demand, high occupancy rates, and a series of strategic asset enhancement initiatives (AEIs), the REIT is well-positioned for sustained growth amidst favorable macroeconomic trends and tightening retail supply.

Key Performance Highlights

• Healthy Leasing Metrics: The retail portfolio achieved a committed occupancy rate of 99.5%, continuing its strong track record of maintaining high occupancy across its malls.
• Shopper Traffic and Tenant Sales: Retail portfolio shopper traffic increased by 2.7% YoY, while tenants’ same-store sales grew by 2.5% YoY, reflecting robust consumer activity and effective property management.
• Financial Stability: Aggregate leverage stood at 39.3%, with an improved average cost of debt at 4.0% compared to 4.1% in the previous quarter. FCT also secured a strong interest coverage ratio of 3.33 times.
• Community Engagements: Festive Christmas events in 2024 attracted over 500,000 additional shopper visits compared to 2023, demonstrating the effectiveness of placemaking initiatives in driving footfall.

Strategic Developments

Hougang Mall Asset Enhancement Initiative (AEI): FCT has made significant progress on Hougang Mall’s \$51 million AEI, achieving approximately 50% pre-commitment ahead of construction. The project aims to deliver a 7% ROI upon completion, with expanded F&B and retail options and enhanced shopper experiences to solidify the mall’s position as a community hub.

Tiong Bahru Plaza Enhancements: Following the rejuvenation of Level 2, the mall introduced new-to-market lifestyle tenants and popular F&B brands, delivering a remarkable ROI of ~20%, showcasing FCT’s ability to optimize asset performance.

North Region Opportunities: Causeway Point and Northpoint City North Wing are set to benefit from the development of 24,000 new homes and a 100-hectare commercial hub in Singapore’s North region, increasing shopper catchment and driving long-term growth.

Macroeconomic and Industry Trends

FCT’s performance is underpinned by favorable macroeconomic conditions in Singapore, including GDP growth of 4.0% in 2024 and retail rents projected to recover to pre-COVID levels by 2025. Suburban retail rents have demonstrated resilience, with prime rents growing by 1.6% YoY in Q4 2024. Moreover, limited new retail supply (<1% p.a. growth between 2025 and 2027) and rising household income further support a positive retail outlook.

Portfolio Strength

FCT’s portfolio of nine suburban prime retail properties, valued at approximately \$7.1 billion, continues to deliver stable performance. The portfolio includes major malls such as Causeway Point, Tampines 1, and Waterway Point, which cater to essential trade sectors like food & beverage (37.6% of gross rental income) and beauty & healthcare (15.5%).

What Shareholders Need to Know

Price-Sensitive Highlights:

• The AEI at Hougang Mall, targeting a 7% ROI, and successful rejuvenation projects at Tiong Bahru Plaza demonstrate FCT’s ability to generate value from capital investments.
• Favorable macroeconomic trends, limited retail supply, and robust tenant demand could drive further appreciation in FCT’s asset value and rental income.
• The REIT’s strong financial position, with 88.3% of borrowings tied to green loans and a well-spread debt maturity profile, enhances its stability and appeal to ESG-conscious investors.

Outlook

FCT’s management remains focused on delivering stable growth through active asset management, community engagement, and strategic enhancements. The suburban retail market is expected to see continued growth, supported by rising household income, government support measures, and an expanding shopper catchment from new housing developments.

Investors should monitor FCT’s progress on its AEI projects and its ability to capitalize on favorable market conditions, which could influence its valuation and share price performance.

Disclaimer

This article is for informational purposes only and should not be considered financial advice. Investors are encouraged to conduct their own due diligence or consult with a financial advisor before making investment decisions. The information provided is based on the latest available data and may be subject to change.