For 1QFY2018 ended Dec 31, FCT’s distribution per unit was three cents, up 3.8% y-o-y. This was the result of gross revenue rising 8.7% y-o-y and net property income increasing 9.1%. DPU was also enhanced because the proportion of management fee to be paid in units was 50% for 1QFY2018. A year ago, 70% of management fee was paid in units. This will be progressively decreased as Northpoint — which had undergone AEI — starts trading again on full occupancies.
It is interesting that all three pure-play Singapore-focused retail real estate investment trusts turned in resilient performances in FY2017. CapitaLand Mall Trust — despite facing headwinds — announced a DPU of 11.16 cents, up 0.3% y-o-y. FCT, which has a September year-end, announced a DPU of 11.9 cents, up 1.2% y-o-y. SPH REIT’s DPU rose 0.5% to 5.53 cents. It has an August year-end. Its 1QFY2018 DPU was flat at 1.34 cents. (SPH REIT’s income support for one of its two malls, Clementi Mall, falls off this year.)
In comparison with the resilience of retail REIT DPUs, almost all the hospitality REITs announced declines in DPU, as did the two largest commercial REITs and around 70% of the industrial REITs.
Since the start of the year, units in CMT have fallen 7.5%, while FCT has lost just 4.9%, reflecting its better portfolio performance. SPH REIT has declined 24.2%.
FCT offers DPU resilience, while CMT’s valuation and debt profile should provide shelter from the storm should interest rates rise.
