Frasers Centrepoint Trust says strategy will focus on larger malls

FRASERS Centrepoint Trust (FCT) intends to concentrate on larger malls as part of its portfolio management strategy.

Speaking at a briefing following the release of the real estate investment trust's results for its first half ended March 31, the chief executive of FCT's manager Richard Ng said: "It’s been identified, as part of our strategy going forward, to keep to larger malls".

FCT had announced on March 19 that it plans to divest YewTee Point, with completion targeted for May 28.

Responding to a question regarding this divestment, Mr Ng said: "Increasingly, we believe that the performance of the smaller assets… especially not within the kind of level of residential catchment we're looking at, may be a little bit more of a challenge."

FCT's distribution per unit (DPU) rose by 28.4 per cent to 5.996 Singapore cents for H1 FY21, from 4.67 cents last year.

Gross revenue was up 73.8 per cent to S$173.6 million, from S$99.9 million the previous year.

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The half-year performance was boosted by the enlarged retail portfolio post acquisition of AsiaRetail Fund (ARF), the trust said in a regulatory filing on Friday.

Net property income grew 73.8 per cent on the year to S$125.7 million for the half year, from S$72.3 million.

Distributable income rose 42.3 per cent year on year to S$101.1 million, from S$71 million.

Mr Ng noted during the call that shopper traffic in FCT’s malls is "still slightly lagging". This is partly because work from home arrangements have just recently been lifted, and partly because of continued safe distancing measures.

Tenant sales, however, have recovered to near pre-Covid-19 levels. Sales among FCT's portfolio tenants grew 0.4 per cent in January and 11.7 per cent in February, on a year-on-year basis.

As at March 31, the group’s property portfolio comprised 11 properties.

Come June 1, FCT will be adopting the new code of conduct introduced in March for the leasing of retail premises.

The code sets out guidelines for the negotiation of lease agreements in 11 areas, including rental structure, third-party fees, pre-termination by landlords or tenants, and data sharing.

Mr Ng said some of the items included in the code are already in practice but that there would still be some changes that "may have some impact to our bottom line".

He added, however, that the impact is likely to be minimal - at a "low single digit" at most - and that if events held at atriums were to be allowed once more, sales from such events would be more than enough to offset this.

FCT's mantra will be to "consolidate, adapt, and grow".

"We can look across our portfolio and see what should we do with some of the smaller malls," Mr Ng said, adding that the pandemic has shown that the stronger malls are those located in strong catchment areas and with good connectivity.

As of 1.41pm, units of FCT were trading S$0.02 or 0.8 per cent higher at S$2.47.