We are pleased to present Frasers Centrepoint Trust (“FCT”)’s Annual Report 2011 and share with you the achievements of FCT in the financial year ended 30 September 2011 (“FY2011”).
Another year of strong performance
We are delighted that FCT has delivered another year of strong performance in FY2011. FCT achieved a record-high distribution per unit (“DPU”) of 8.32 cents in FY2011, making it the fifth consecutive year of DPU growth. FCT also registered fresh highs for its gross revenue at $117.9 million and net property income at $82.6 million. Net assets reached a record-high of $1,152 million or $1.40 per unit, on the back of a $97.2 million asset revaluation surplus and the addition of the newly-acquired Bedok Point.
Lease renewals at FCT’s malls continue to be healthy with a total of 129 leases renewed in FY2011. The average rental renewal rates for FCT’s portfolio increased by 8.6 % over preceding rental rates, compared to the 7.2 % increase attained in FY2010. FCT’s financial position remained strong with gearing level at 31.3% as at 30 September 2011. We refinanced our S$260 million commercial mortgage-backed securities (the “CMBS”) which matured in July 2011 with a 5-year $264 million secured bank borrowing at lower borrowing cost. This refinancing improved FCT’s debt maturity profile and enhanced FCT’s financial flexibility as two of the three properties Causeway Point and Anchorpoint) that were previously secured under the CMBS were released from encumbrances.
Total assets of FCT grew 17.9% year-on-year to $1,787 million as at 30 September 2011, on higher property valuation and the acquisition of Bedok Point. FCT recognised revaluation surplus of $97.2 million on its portfolio in FY2011, with Causeway Point contributing the largest proportion of $59.2 million. This is the value creation from the continuous investments in enhancing our assets to improve their income-producing capability.
Causeway Point refurbishment progressing well
We continue to make good progress with the asset enhancement work at Causeway Point. 65% of the refurbishment work was completed as planned at the end of September. Key sections, including the basement and the first two levels of the mall were re-opened progressively and the mall’s occupancy rebounded strongly to 92% at end-September. This drove a strong performance for Causeway Point for the financial quarter ended September 2011. Gross revenue for the mall jumped 62% over the preceding quarter to $17.3 million and the net property income at $13.3 million was almost double that of the preceding quarter. The refurbishment work is on-track for full completion expected in December 2012.
Newly-acquired Bedok Point to contribute to DPU growth
We announced on 29 July 2011 the acquisition of Bedok Point for $127 million. The acquisition was completed on 23 September 2011, after Unitholders approved the transaction at an Extraordinary General Meeting. We raised $66.7 million in gross proceeds from a successful equity placement exercise on 14 September 2011 to part-finance this acquisition. Bedok Point is expected to contribute $7 million in net property income for our financial year 2012 and Unitholders can expect to enjoy higher DPU from this yield-accretive acquisition.
The Monetary Authority of Singapore has advised that Singapore’s economy could experience slower growth in the near-term due to weaker global economy outlook. However, the retail sector in Singapore has historically demonstrated resilience even amidst slow economic growth period, relative to other industries. The larger resident-population, sustained low unemployment rate and the growing affluence in Singapore over the last few years have helped to grow the retail sector and underpinned its resilience. We believe FCT is well-positioned to benefit from these positive factors. We will continue to pursue acquisition opportunities that will reinforce FCT’s position as a leading suburban retail mall REIT, to grow FCT’s portfolio and to further enhance the returns to our Unitholders.
We wish to express our appreciation to our Board of Directors for their guidance and wise counsel. We also wish to thank our Unitholders, business partners, colleagues, tenants and shoppers for their commitment and steadfast support to FCT and in bringing FCT through yet another rewarding year for all.