Tuesday, 23 April 2019

Frasers Commercial Trust (FCOT) Q2FY19 Review

The result is expected as there is no major development in Q219 and dividend is supported by $4.9m gain from the Gain on disposal of hotel development right. With this total of $27.2m out of $44m has been used.

Another bad news is Microsoft Operations Pte Ltd which contribute around 3% FCOT gross rental income has exercise option to per-terminate its lease in Alexandra Technopark and it will end by Jan 2020.

There are 2 AEI in progress
  1. China Square Central that cost $38m
  2. Central Park that cost $11.5m
Those AEI need $$$ which might explain the debt has gone up from previous  610m to 627m.

From the portfolio, filling 40% vacancy space in Alexandra Technopark will not totally help the gap, Total NLA is around 1m sq ft so 40% will be around 400k sq ft and multiply by rent based on slide 35 will just net around $1.5m gross rental.

I am really guessing they will do some acquisition as I don't think the current dividend is sustainable as the management fees already paid 100% in unit and the gain of disposal left around $17m which might only last 3-5 quarters (Note the cash balance is around $20m)

Sunday, 20 January 2019

Frasers Commercial Trust (FCOT) Q1FY19 Review and Google in talk with FCOT

Recently there is some news around Google in talk for 400k sq ft in Alexandra Technopark, As I currently I own some share of FCOT, this is a good news for me.

Now, lets look into Q1FY19 result

The overall gross revenue has been on the down trend quarter by quarter from $35m to $31m and the dividend still being supported by
  1. Gain on disposal of hotel development right by $3.7m (Q1FY18 was supported with $1.9m)
    • Total use from this gain to date is around $22.3m out of $44m
  2. 100% Management Fees paid in unit (FY17 and before, portion of the management fees was paid in cash)
HP also did not renew 93k sqft space that expire by 31 Dec 2018 so Q2FY19 will be impacted by this event as well.

Based on the slides on the business park rent for city fringe is around $5.8sq ft so if the deal with Google does happen, then it will be revenue around $2m based on $5.8 calculation.

It will help to reduce the dependency for the dividend to be supported by gain on disposal of hotel development right.

Seem I will need to expect management might plan some acquisition to be able to maintain dpu payout and back to the day where management fee paid in cash instead of unit

The Gearing has went down from 34.7% in previous year to 28.4% this year as a result of the divestment of 55 market street. No major refinancing till FY20 and the current average interest rate is 2.97% and 90% borrowing fixed rate

For the occupancy, it increase from 83.4% to 83.8% compare to the previous quarter. I am expecting positive rental reversion for Singapore properties and negative rental reversion for Australia property plus the weakness in current AUD.

In summary,
  1. DPU will remain flat in the next coming quarter supported by the gain on hotel development
  2.  93k sqft space not renew will drag down the gross revenue in Q2 if item 3 below does not materialised
  3. Deal with Google will off set some dependency on DPU to be supported by the gain on hotel development
  4. Potential growth for DPU will come from China Square central retail podium which will increase from 64k sqft to 78sqft which is currently already 40% pre committed.
  5. Potential acquisition in 2019

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