FCT portfolio occupancy stable for Q3 even as shopper traffic trends lower

Singapore

FRASERS Centrepoint Trust (FCT) said its retail portfolio occupancy remained stable during the third quarter ended June, despite disruptions from Covid-19.

In a quarterly business update lodged on Thursday, FCT said committed portfolio occupancy across its retail portfolio stood at 96.4 per cent as at June 30, slightly higher than the 96.1 per cent in end-March.

FCT noted that "quality suburban retail spaces remain in demand by retailers". The properties that had improvements in occupancy were Tampines 1, Waterway Point and Northpoint City North Wing.

The manager said that portfolio tenants' sales nudged back to around pre-Covid levels despite tightened measures during Phase 2 (Heightened Alert), and performance was "underpinned by the resilience of FCT's portfolio of suburban malls".

"The nature of our malls is that it is something that works well, whether in this period or otherwise," said Richard Ng, chief executive of FCT's manager, in a briefing on Friday morning.

"If you look at our tenant sales, it is driven by the fact that our products are mostly essentials," he added. "Our sales tend to be more resilient and stable throughout."

In April, portfolio tenant sales were around 94 per cent of the pre Covid-19 average, but this dipped to 81 per cent in June, amid tighter measures.

FCT added that shopper traffic between April and June fell to around 60 per cent of pre-Covid-19 levels, due to implementation of tighter measures to stem the spread of the virus.

The manager noted that suburban retail malls generally have a higher proportion of net lettable area allocated to essential services than central malls. Around 45 per cent of FCT's current retail portfolio by net lettable area are in essential services.

The trust's Singapore portfolio comprises nine suburban retail malls, with a portfolio net lettable area of 2.2 million square feet.

The top tenants as at end June were NTUC Fairprice, Dairy Farm Group and Kopitiam. These collectively accounted for around 10.4 per cent of total portfolio net lettable area.

FCT's weighted average lease expiry (WALE) by gross rental income stood at 1.63 years as at June 30, compared to 1.53 years in the previous quarter. FCT said it has renewed substantial expiring leases due in the current financial year, with only 8 per cent remaining to renew in Q4.

The manager noted that FCT is in a "strong financial position with ample debt headroom to support future growth".

Total borrowings amounted to S$1.87 billion, and its gearing level stood at 33.9 per cent as at end-June 2021 compared to 35 per cent a year earlier. Average debt maturity rose to 2.8 years, from 2.3 years in the previous year.

FCT's manager said it will explore asset enhancement initiative opportunities within the portfolio for organic growth, and will also look out for inorganic growth opportunities.

"What we are doing now is to rebalance, refocus our portfolio, and strengthen our balance sheet ... (to prepare for) when the right opportunity comes up," Mr Ng said.

Units of FCT were trading 0.8 per cent or S$0.02 lower at S$2.39 as at 11.43am on Friday.

Additional reporting by Jude Chan