There was also “strong” leasing momentum for Hougang Mall with a precommitment occupancy of 74%, amid its ongoing asset enhancement initiatives (AEI), according to management.
Gearing was transitionally higher at 42.8% at end-3QFY2025 and was subsequently lowered to 40.4% in July, with repayment of loans from $200 million proceeds of perpetual securities.
The CGSI analysts believe healthy reversions will likely contribute to positive asset revaluation at the end of FY2025.
While no reversion numbers were reported for 3QFY2025, management noted that FCT is on track to meet its full-year reversion guidance of around 7%.
In a July 25 note, CGSI’s Lock and Li keep their “add” call with an unchanged $2.70 target price on FCT.
‘Positive signs across the board’
RHB Bank Singapore’s Vijay Natarajan, meanwhile, says there are “positive signs across the board” for FCT, staying “buy” in a July 25 note with a higher $2.50 target price from $2.39 previously.
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AEI will be the REIT manager’s next lever for growth, says Natarajan. Works at Hougang mall began in April, with completion targeted for September 2026. Works are next expected to begin at Nex, with improvements now in “advanced planning stages”, and Northpoint City South Wing.
The improvement to the mall in Serangoon could potentially lift gross floor area (GFA) by some 60,000 sq ft, and will be funded by a joint venture company, notes Natarajan.
“Management sees AEI as a good medium-term growth opportunity to enhance shareholder returns and maintain dominant positioning,” he adds.
‘Undervalued’
Morningstar Equity Research’s Xavier Lee thinks FCT units are “undervalued”. “[We] like the trust for its portfolio of high-quality suburban malls that should stay resilient through [the] economic cycle.”
In a July 25 note, Lee keeps his fair value estimate unchanged at $2.42 for “narrow moat” FCT, which has a four-star rating against Morningstar’s five-tier scale.
FCT’s tenants should also benefit from the Singapore government’s voucher handouts, especially those designated for supermarkets.
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Management also provided an update regarding its cinema tenant, Cathay Cineplex, which has been making monthly payments toward rental arrears. Financially, Cathay Cineplex contributes less than 1% of FCT's total gross rental income, making its impact minimal.
“We view the decline in cinema attendance as structural and unlikely to reverse. Hence, mall owners like FCT need to reposition their malls accordingly to attract alternative traffic drivers. This shift could also unlock additional value from areas currently occupied by cinemas,” writes Lee.
As at 2.21pm, units in FCT are trading 1 cent lower, or 0.45% down, at $2.19.
