Is Frasers Centrepoint Trust A Good Buy In 2025? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of Frasers Centrepoint Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Information Is Accurate Up To Jan 25

Business Description

Frasers Centrepoint Trust is a Retail REIT that was listed in 2006 and owns 10 properties in Singapore.

What I Like About FCT:

Very stable distribution (Fig 8)
100% of their assets are in Singapore
Management has a very clear strategy (focus on suburban malls)
Portfolio occupancy and rental reversion is resilient (Fig 11 & 12)
Management has displayed competency in managing their debt

What I Do Not Like About FCT:

Updates From Recent Performance (FY 2024)

General Comments:

Gross Revenue and Net Property Income decreased by 4.9% and 4.6% due to the lower contributions from divested Changi City Point and AEI in Tampines 1. Excluding these two factors, GR and NPI grew by 3.5% and 3.4% respectively.
DPU decreased by 0.9% due to a larger base of units and lower NPI, which was offset by higher distribution from joint ventures.
The total appraised value of the property portfolio increased by 1.2%, but Net Asset Value decreased by 1.3% due to an enlarged unit base.

Positive Headwinds:

Population and income growth will contribute to the long-term earnings resiliency of the tenants and hence the portfolio.
The government’s plan to develop further residential housing in the north (42,600 homes to be added over the near and long term) creates a steady footfall for malls such as Northpoint City and Causeway Point.
No refinancing risk in FY2025 as the manager has completed the refinancing of all its borrowings due in FY2025 (Fig 6)

Negative Headwinds:

The embarkment of Hougang Mall asset enhancement in FY2025 which commences in second quarter of 2025 will result in lower contribution and gross revenue from the mall until its estimated completion in third quarter of 2026.
The expected commencement of the JB-Singapore RTS at the end of 2026 may result in potential loss of sales for Singapore retailers, though the silver lining is that the malls are well positioned to also capture the potential higher footfall in the north area despite the potential headwinds and competition from JB retail scene.

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