{"id":52554,"date":"2025-01-28T05:43:53","date_gmt":"2025-01-28T05:43:53","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/frasers-centrepoint-trust-2h-fy2024-full-year-update-oct-2023-to-sep-2024\/"},"modified":"2025-01-28T05:43:53","modified_gmt":"2025-01-28T05:43:53","slug":"frasers-centrepoint-trust-2h-fy2024-full-year-update-oct-2023-to-sep-2024","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=52554","title":{"rendered":"Frasers Centrepoint Trust 2H FY2024 Full-Year Update (Oct 2023 To Sep 2024)"},"content":{"rendered":"


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On 25 October 2024, Frasers Centrepoint Trust (FCT) released the results for 2H2024 and FY2024 that ended on 30 September 2024.<\/p>\n

The presentation slides<\/a> contain a lot of insightful information, and they can be found on FCT\u2019s official website.<\/p>\n

The Usual Healthy Metrics From FCT<\/h2>\n

FCT reported strong portfolio performance that reflected healthy leasing demand, with\u00a0retail portfolio occupancy at 99.7%<\/strong>\u00a0and an\u00a0average rental reversion at +7.7%<\/strong>.<\/span><\/p>\n

Increased shopper traffic and sales for FY2024 saw higher numbers, with sales levels 20% above pre-COVID levels.<\/p>\n

\"1<\/figure>\n

Stable But Elevated Cost Of Debt (4.1%)<\/h2>\n

Some aspects of REITs are easy to understand \u2014 shareholders want income to go up and expenses to go down.<\/p>\n

The bulk of a REIT\u2019s expenses are attributed to debt costs, which have spiked in recent years due to rising interest rates.<\/p>\n

FCT management has stated that the cost of debt is expected to remain stable but elevated at around 4.1%<\/strong> for FY2025.<\/p>\n

Despite the pivot of the fed rate during the September 2024 FOMC meeting, the cost of debt is a lagging indicator.<\/p>\n

\"2\"2<\/figure>\n
\"3\"3<\/figure>\n

When maturing debts are refinanced during the subsequent financial years at the current rates, they will impact the average cost of debt. It is likely that we will only see the cost of debt go down in a year or two.<\/p>\n

Meanwhile, the Fed is expected to lower rates<\/a> to the 3.5% to 3.75%<\/strong> range in 2025 from the current 4.75% to 5%<\/strong> range.<\/p>\n

Considering that FCT\u2019s cost of debt had soared from 2.16% in 2021 to 4.1% in 2024<\/a>, even a modest decline back to the 3% range for FCT\u2019s cost of debt would be an enormous boost for FCT.<\/p>\n

With all factors staying constant, when expenses (such as the cost of debt) go down, DPU goes up.<\/p>\n

Significant Activities For FCT In A Busy Year<\/h2>\n

While Changi City Point was divested (October 2023), FCT now has a total 50% stake in NEX<\/strong> (March 2024), diversifying and strengthening the portfolio.<\/p>\n

Additionally, the asset enhancement initiative (AEI) of Tampines 1 was completed<\/strong> in August 2024.<\/p>\n

\"4\"4<\/figure>\n

The next six months should be a period of stability for FCT, during which all properties can make full contributions to the portfolio with no divestments and acquisitions. The 1H FY2025 update in May 2025 would make for an interesting read before the upcoming Hougang Mall AEI takes place in the second quarter.<\/p>\n

DPU, Net Property Income and Revenue<\/h2>\n

The FCT portfolio has seen positive growth if we exclude the effects of the divestment of Changi City Point and AEI for Tampines 1.<\/p>\n

\"5\"5<\/figure>\n

Distributions from investments have grown over the last two years despite the divestment of Changi City (Carpark Operations) and Hektar REIT due to the significant stake that FCT has acquired in NEX and Waterway Point.<\/p>\n