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FCT Q3 DPU slips to 3 S cents on lower net property income, higher costs

CONTRIBUTIONS from Frasers Centrepoint Trust (FCT)'s holdings in associates PGIM Real Estate AsiaRetail Fund (PGIM ARF) helped third-quarter results for the retail landlord, even as it faced lower net property income, higher borrowing costs and an expanded unit base.

Distribution per unit (DPU) edged down to three Singapore cents from 3.053 Singapore cents in the preceding year, on an enlarged unit base from FCT's completion of a private placement in May and preferential offering in June.

Meanwhile, Q3 distribution for unitholders expanded 5.8 per cent to S$29.9 million from the previous year, with FCT's investments in PGIM ARF and Hektar Reit (H-Reit) in 3Q19 contributing about S$5 million (comprising largely of one-off divestment proceeds from Liang Court) and S$0.8 million respectively to distributions.

Including what was retained, income available for distribution for the quarter ended June 30 rose 12.4 per cent to S$31.8 million.

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The distribution comprises an advanced DPU of 1.909 Singapore cents for the period from Apr 1 to May 27, and DPU of 1.091 Singapore cents for the period from May 28 to June 30. The advanced component is payable July 25 while the rest is payable Aug 29.

Gross revenue crept up 1.6 per cent to S$49.1 million from the year-ago period, thanks to improvement in revenue from Northpoint City North Wing and Changi City Point. However, net property income dipped 1.1 per cent to S$34.6 million from the previous year as an absence of property tax refunds contributed to property expenses rising 8.9 per cent to S$14.4 million. 

Non-property expenses of S$11.9 million was S$2.2 million higher than the same period last year, largely from higher borrowing costs from additional borrowings and higher interest rates on loans.

Year-to-date, DPU was at 9.157 Singapore cents, up from 9.153 cents in the year-ago period, while distribution to unitholders rose to S$87.1 million from S$84.8 million.

FCT assets include suburban retail properties Causeway Point, Northpoint City North Wing and Yishun 10 Retail Podium, Anchorpoint, YewTee Point, Bedok Point and Changi City Point. A new addition is Punggol's Waterway Point, with the acquisition completed in July.

Portfolio occupancy rate as at June 30 was 96.8 per cent, which was higher than 94 per cent as at a year ago.

The quarter's portfolio shopper traffic was 6.1 per cent higher year-on-year, attributed mainly to increases at Northpoint City North Wing and YewTee Point. Portfolio average rental reversion was at 3.1 per cent, compared to the second quarter's 2 per cent. Gearing level as at June 30 was 23.5 per cent. 

The Reit manager said: "The focus on necessity shopping, healthy mall occupancy and steady shopper traffic helps to underpin the stable performance and resilience of the portfolio."

Future pipeline assets include Northpoint City South Wing.

FCT has approximately 67 per cent of its borrowings on fixed or hedged-to-fixed interest rates.

FCT units closed up S$0.02 or 0.8 per cent at S$2.65 on Tuesday.