The Positives
+ 2Q24 retail portfolio occupancy remained almost full at 99.9% (unchanged QoQ). Occupancy was at least 99% across all the malls. 1H24 rental reversion of +7.5% exceeded our expectations, and it was above 1H23 rental reversion of +4.3%. We expect this healthy positive rental reversion trend to continue for the remaining 14% of leases (by GRI) that expire in FY24.
+ Improvements in tenants’ sales and shopper traffic. 2Q24 tenants’ sales and shopper traffic were 4.3% and 8.1% higher YoY, respectively. Portfolio shopper traffic is now only 2% below pre-COVID levels, while tenant sales are c.20% higher than pre-COVID levels. We expect tenants’ sales to remain robust, supported by the various government handouts to Singapore residents in 2024.
+ All-in cost of debt improved 10bps QoQ to 4.2%, as FCT used the proceeds from the divestments of Changi City Point and interest in Hektar REIT to pay off some of the higher-cost debt. Aggregate leverage rose 1.3%pts QoQ to 38.5% as loans were drawn down to finance the increased stake in NEX and the Tampines 1 AEI. 68.5% of debt is hedged to a fixed rate. FCT has no debt expiring in FY24, and its ICR is 3.26 times. FY24e all-in cost of debt is expected to be low 4%.
The Negative
– nil
Darren has over three years of experience on the buy-side as a fund manager. During his time as fund manager, he has managed multiple funds and mandates including dividend income, growth, customised, Singapore focused and regionally focused funds. He graduated from the University of London with a First-Class Honours degree in Banking and Finance.