5 Things To Know About Frasers Centrepoint Trust (SGX Code: J69U), The REIT That Owns Neighbourhood Malls Like Causeway Point And Northpoint City

This article is republished with permission from Dollars And Sense .

26-Nov    Share!

Real estate is hot property in "land-scarce" Singapore. We have an open and transparent property system that makes it accessible for anyone to purchase a residential property (public or private) on our tiny island.

But it's not so straightforward when it comes to commercial properties?especially for good-quality, well-located retail malls. These are primarily held by a few big players and made available to retail investors through listed Real Estate Investment Trusts (REITs).

Among the 8 retail REITs that are listed on the Singapore Exchange (SGX), only Frasers Centrepoint Trust (SGX: J69U) gives pure Singapore exposure. Listed in 2006, Frasers Centrepoint Trust (FCT) has the backing of its sponsor, Frasers Property Limited, another SGX-listed multinational property company that owns, develops, and manages a diverse, integrated portfolio of properties.

With assets under management of approximately S$6.2 billion, Frasers Centrepoint Trust's current portfolio consists of 9 retail malls - like Causeway Point in Woodlands and Northpoint City in Yishun - and one office building that are located within the suburban regions of Singapore.

These buildings, conveniently located on/next to MRT stations and/or at bus interchanges, serve a combined catchment population of 2.6 million. This results in high foot traffic for FCT malls, enabling them to sustain a high committed occupancy rate of 97.5 percent (as of September 30, 2022), which also supports stable rental growth.

Furthermore, FCT’s strong tenant base, which includes the top five, NTUC Fairprice, Breadtalk Group, Kopitiam, Dairy Farm Group, and Metro Limited, has allowed it to remain resilient and well-positioned to ride structural trends in the new (WFH) normal by focusing on the essentials and serving as “last mile fulfilment hubs.”

If you are interested in the retail REITs in Singapore, here are 5 things to know about Frasers Centrepoint's business.

Having a "moat" or a competitive advantage is something many investors look for in companies they invest in. Can you share how FCT has a strong advantage?

As the second largest suburban retail mall owner in Singapore and part of the Frasers Property Group, FCT has the scale and platform to thrive in the endemic phase of COVID-19 and beyond. The COVID-19 pandemic has transformed many aspects of the way we live, work and play, which include the rise of omnichannel retailing and shift to hybrid work arrangement. FCT is well-positioned to benefit from these trends due to its portfolio properties' competitive advantages of being near homes and transportation nodes, focus on diversified essential trade and services, high quality amenities and a well-established shopper loyalty program.

Read Also: 5 Things To Know About Daiwa House Logistics Trust (SGX Code: DHLU), A Japan Based Logistics REIT

Understanding your customers is one of the best ways to retain and build business. What are some things FCT has learned about its customers changing needs in a post-pandemic world? 

The proximity of FCT's malls to homes offers shoppers flexibility and convenience for their orders through Frasers digital platforms to be fulfilled. The rise in hybrid work arrangements means more people will work from homes and shop in nearby malls. There is a growing demand for prime spaces in large and well-located suburban malls as retailers and F&B operators assess their store location strategy to manage rising costs, manpower constraints and changes in shopper behaviour. We believe FCT's portfolio of well-located and high-quality suburban retail properties is well-positioned to benefit from these trends.

What is FCT doing to help tenants enhance sales?

To help our retail tenants, we often run regular advertising and marketing programmes in our malls and on our digital retail platforms to draw shopper's attention and interests.

Our tenant mix focuses on the provision of essential trades and services, including grocery, pharmacies, food and beverage, clinics, beauty and wellness, that serve the needs of the consumers in the catchment. We curate the tenant mix of each mall according to the profile of the shopper catchment (e.g. shopper demography, preference and needs) to adapt to the needs of our consumers.

We also strive to introduce new retail concepts and brands to constantly refresh the appeal of the malls and to stay relevant to shoppers.

Read Also: 5 Things To Know About RE&S Holdings Limited (SGX: 1G1), The Company Behind Ichiban Sushi, Ichiban Boshi, Kuriya Dining and Kuriya Japanese Market

Sustainability is a growing priority for investors, how is FCT committed towards sustainability practices?

Sustainability is a core component of FCT's business strategy. We work closely with our Sponsor, Frasers Property Limited, towards the Group's goal to net-zero carbon by 2050. Notable progress has been made in FY22 with the introduction of Technology Risk Management and Environment Risk Management in FCT's governance framework. FCT's climate-rated disclosures are also aligned with the recommendations of the Task Force on Climate-Related Disclosures (TCFD).

For the second consecutive year, we achieved a 5-Star rating in the 2022 GRESB Real Estate assessment. FCT has also received an "A" rating from the MSCI ESG Ratings in May 2022, improving from our previous "BBB" rating, for advancing in FCT's management of financially relevant ESG risks and opportunities.

What is FCT's value proposition to its unitholders and potential investors? What do you think investors may have overlooked about it?

We believe that FCT provides investors a compelling investment proposition of a stable, well-managed pure Singapore property REIT that has an established track record of steady performance. We have demonstrated strong growth, from our initial three-property portfolio with less than S$1 billion in AUM in 2006, to the current 10-property portfolio of over S$6 billion in AUM, through prudent and responsible management.

As the second largest suburban retail mall owner in Singapore and part of the larger Frasers Property Group, FCT has the scale and platform to thrive in the endemic phase of COVID-19 and beyond. We believe that we are well-positioned to benefit from lifestyle trends post-COVID. The proximity of FCT's malls to homes offers shoppers flexibility and convenience for their orders through Frasers Property's digital platforms to be fulfilled. The rise in hybrid work arrangement means more people will work from homes and shop in nearby malls.

FCT's focus on diversified essential trade and services also continues to serve the needs of our shoppers and this underpins the resilience and relevance of our retail properties moving forward.

Read Also: 5 Things To Know About First REIT (SGX:AW9U), The Company Behind Pacific Healthcare Nursing Homes In Singapore

Editor's Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 22 November 2022 and have been republished with permission. You can read more on Frasers Centrepoint Trust on the SGX website.

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