Frasers Property’s capital recycling transactions total S$1.1 billion in H1 2024

FRASERS Property will focus on capital recycling and growing its development exposure, the group said, after it posted an 81.8 per cent drop in net profit in the first half of the financial year. 

For the first six months ended March 2024, Frasers Property reported a net profit of S$35.8 million, down from S$197.2 million in the year-ago period. 

At a briefing on Monday (May 13), Panote Sirivadhanabhakdi, Frasers Property’s group chief executive officer, said: “Continual market headwinds have created ongoing challenges for us, which are reflected in these results.”

He said that in order to add market resilience, the company will focus on the disciplined and consistent unlocking of value, increasing development exposure over the medium to long term, and strengthening the resilience of the group’s income streams. The group has executed capital recycling transactions totalling S$1.1 billion in H1, he said. 

In the first quarter of this year, Frasers Property inked a deal to sell the 313-room hotel Capri by Fraser, Changi City, for about S$171.8 million. The purchaser is believed to be a consortium comprising Atelier Capital Partners, TPG Angelo Gordon and Far East Consortium International. 

On Monday, Sirivadhanabhakdi said that the Capri asset was part of Frasers Property’s strategic development and had created value. 

“But it’s a shorter tenure, and it has also seen its structural challenges within the industrial business park area. We have seen what we can get out of (it) and what we would get more out (from) the capital we are able to recoup,” he said.

Frasers Property is also understood to be in advanced negotiations for the sale of its 72-unit serviced-apartment property and three conserved warehouses along the Singapore River, The Business Times reported in May. An entity linked to Tuan Sing Holdings is tipped to be the prospective buyer at a price said to be slightly above S$130 million.

Group revenue for the first half fell 20.4 per cent to S$1.5 billion for the six-month period, down from S$1.9 billion the year before.

Earnings per share dropped to 0.91 Singapore cent, from 5.02 Singapore cents in the previous corresponding period.

No interim dividend was declared, unchanged from the previous year.

Overall revenue from the Singapore operations fell 63 per cent to S$266 million, while profit before interest and tax (PBIT) shrank 39 per cent to S$202 million. The drop was partially due to the absence of contribution from Riviere, which obtained its Temporary Occupation Permit in January 2023.

Soon Su Lin, chief executive officer of Frasers Property Singapore, said: “We remain very confident (in) the Singapore residential market. Of course, sentiment could have turned a bit more cautious as inflationary pressures have stepped in, but prices have been very resilient.”

In Thailand, revenue fell 13 per cent to S$234 million, while PBIT slipped 25 per cent to S$61 million due to a lower level of residential settlements, though this was offset by improved performance from investment properties.

Giving an update on One Bangkok, the massive mixed-use project Frasers Property is developing in Thailand, Lim Hua Tiong, chief executive officer, Emerging Markets, Asia, said the first two shopping malls are expected to open at the end of 2024. So far, the shopping malls are about 60 per cent pre-leased, he said.

Meanwhile, Frasers Property’s industrial segment contributed S$204 million in PBIT in H1 2024, about 13 per cent higher than the previous period due to higher contribution from newly completed investment properties. As at Mar 31, Frasers Property has S$35 billion in property assets, with about one-third of these assets in the industrial and logistics sector.

The group’s gearing rose to 79.6 per cent, from 75.8 per cent as at Sep 30, 2023.

Frasers Property is actively exploring and diversifying its funding sources, including tapping the Japanese market as part of efforts to manage debt costs in a higher-for-longer interest rate environment, said Loo Choo Leong, Frasers Property’s group chief financial officer. 

The group will be increasing its development exposure in both residential segments that offer better risk-adjusted returns, as well as non-residential markets that are aligned with sectoral structural trends.

In H1, Frasers Property completed around 356,000 square metres (sq m) of development projects in its non-residential portfolio, with about 1.1 million sq m of pipeline projects under development for the current financial year and beyond, mainly in the industrial and logistics sector.

The group will also strengthen its recurring income asset classes, which constitute 87 per cent of its property assets as at Mar 31.

Sirivadhanabhakdi said: “While we have not fully mitigated the impact of external forces, we have (the) discipline to drive returns across property cycles and cushion the impact of what we cannot control.”