Frasers Commercial Trust sees 8.7% record-high rise in DPU for 4Q14

As costs remain low.

Growth came from higher rental contribution from the underlying leases following the expiry of the master lease at Alexandra Technopark, coupled with imprived occupancy and rental rates at China Square Central.

A report by OCBC reveals that for FY14, revenue inched up 0.5% to S$118.8m, forming 96.8% of the bank’s full-year forecast. DPU grew 8.7% to 8.51 S cents and was spot on with ther estimate of 8.5 S cents, due largely to lower-than-expected finance costs. This DPU was a record high for FCOT.

FCOT managed to achieve positive weighted average rental reversions of 6.0%-18.4% and 13.7%-21.4% for 4QFY14 and FY14, respectively.

Here’s more from OCBC:

We expect this robust momentum to continue, as passing rents for leases expiring in FY15 for China Square Central, 55 Market Street, ATP and Central Park are approximately 23%-27%, 7%-13%, 20% and 25% below the market rate, respectively, based on our estimates. 

In terms of portfolio valuation, there was a slight increase of 0.7% from S$1,811.4m (as at 30 Sep 2013) to S$1,824.9m (as at 30 Sep 2014). The gain in valuation of its Singapore properties was partially offset by the decline in valuation of its Australia assets (partly due to weaker AUD). 

Although there is some softness in the Perth office market, the silver lining comes from the fact that there are minimal leases expiring at Central Park in FY15 (0.7% of its portfolio gross rental income).