Fraser Commercial Trust profit down 2.4% to $22.9mn

Yet distributable income for first quarter up 7% to $7.9m as DPU grew by 4% to 0.25¢.

Frasers Centrepoint Asset Management (Commercial) Ltd (“FCAMCL”), the Manager of Frasers Commercial Trust (“FCOT”) has on Wednesday announced the Trust’s financial results for the first quarter ended 31 December 2010.
Operationally, for the financial quarter, 1 October 2010 to 31 December 2010 (1QFY11), gross revenue was S$29.0 million, 2.3% lower as compared to a year ago. This was mainly due to lower contribution from Cosmo Plaza as a result of the expiry of a significant tenancy in August 2010. Correspondingly, net property income was 2.4% lower at S$22.9 million.

Subsequent to the financial quarter, FCOT successfully completed the divestment of Cosmo Plaza on 18 January 2011. If the financial results for Cosmo Plaza were to be excluded, the net property income for the financial quarter would be comparable to that of last year on the same basis.

Total distributable income was up by 4.1% year-on-year to S$12.6 million from S$12.1 million.

This was attributable to an absence of loss from realisation of forward contract incurred in the prior year. After accounting for distribution to Series A Convertible Perpetual Preferred Units (“CPPU”) holders of S$4.7 million, amount available for distribution to Unitholders is S$7.9 million, an increase of 6.7% from a year earlier. There is no distribution payment this quarter as FCOT distributes semi-annually.

Secured more than 91% of current gross rental income for FY11
As at 31 December 2010, only 8.2% of leases by income (excluding Cosmo Plaza) are due for renewal for FY11, resulting in more than 91% of current gross rental income for FY11 being secure. The relatively modest amount of lease expiries for the next three quarters will provide a stable income platform for FCOT. The Manager will capitalise on the improving leasing markets for the leases that are due for renewal for the rest of the financial year.

Improving portfolio occupancy rate
Portfolio occupancy rate was up 1.0% to 91.8% compared to a quarter ago. This was principally driven by an increase in the average occupancy rate for the Singapore properties from 96.1% to 97.0%. 55 Market Street and KeyPoint have each recorded an increase of 6.5% and 3.9% in occupancy rate respectively to 89.6% and 85.0%. For the Australian properties, average occupancy rate remains healthy at 95.3%. Excluding Cosmo Plaza, the average occupancy rate for the Japan properties and the portfolio would be 93.0% and 96.3% respectively assuming the divestment had been completed on 31 December 2010. The weighted average lease term to expiry (by gross income) of approximately 4.0 years is underpinned by long leases in the Australian portfolio and the Alexandra Technopark master lease.

Divestment of Cosmo Plaza
Pursuant to the sale initiative and the strategy to reshape FCOT’s portfolio, the Manager successfully completed the divestment of Cosmo Plaza, which the Manager considers that it no longer meets the long-term investment strategy of FCOT. Following the completion of the divestment, FCOT’s gearing would improve by 1.8% to 38.0% assuming the divestment had been completed on 31 December 2010, according to a FCOT report.

Looking forward
Mr Low Chee Wah, Chief Executive Officer of the Manager, said “We are pleased with the increase in portfolio occupancy rate in the last quarter. This resulted from the Manager’s proactive leasing efforts, capitalising on the higher demand for office space. In addition, the divestment of Cosmo Plaza would improve the overall quality of the portfolio and create additional debt headroom for FCOT to enlarge its existing portfolio via future acquisitions.”