Positive surprise in 4QFY09 — The AEI for Northpoint (NP) was completed as of Jun-09 but will only be fully operational by Jul/Aug this year. Management has conservatively guided that the NPI for the quarter will be about $4.5m. For 3QFY09, reported occupancy for NP rose just 3%pts qoq (72% to 75%), but NPI rose 35% qoq. As at Jun-09, 97% of NP is leased or under advanced stages of negotiation. In addition, 4QFY09 has seasonally been the strongest, as it coincides with the Great Singapore Sale. FCT has also progressively added a GTO component to most of its leases.
Issued $75m notes — In Jun-09, FCT has issued $75m 4.8% fixed rate notes due in 2012 under its MTN programme. Some $22.5m short-term loans were refinanced during the quarter with the proceeds, with the remainder used to pay down the $57.5m outstanding in 4QFY09. Gearing ratio rose to 32.7% as at end-Jun but will revert back to below 30% post the repayment in 4Q.
Maintain Buy — We maintain our above consensus estimates for FY09E and view that 4QFY09 could surprise the Street on the upside. We like its exposure to the resilient suburban malls. At current price, FCT still offers yields of over 8%, higher than CapitaMall Trust.
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