Lease renewals favourable for FCT's growth: analysts

About 81% of these leases are located in its four major malls.

Fraser Centrepoint Trust’s (FCT) leases that are set to be renewed in FY2020 are expected to be a boon to the trust as it will be backed by its malls’ high footfall and niche position, according to a note by CGS-CIMB.

About 81% of these leases are located in FCT’s four large malls, namely: Northpoint City North Wing (NCNW), Causeway Point (CP), Waterway Point (WP) and Changi City Point (CCP). Leases up for renewal in FY20 have been reduced from 35.7% of total gross income in Q4 2019 to 26.6% in Q1 2020.

Furthermore, another report from Maybank Kim-Eng added that they are expecting low single-digit reversions and rental growth supported by limited new supply within the respective micro-markets.

FCT's net property income (NPI) edged up 2.6% YoY to $36.32m in Q1 2020 from $35.39m in 2019. The trust renewed 60 leases during the same period, accounting for 142,103 sqft of NLA at an average portfolio rental reversion of +5%.

Portfolio occupancy as at 31 December 2019 was 97.3%, 0.8% QoQ higher. Causeway Point led with an occupancy rate of 97.8%, followed by Anchorpoint as its occupancy recovered to 93.5% from only 79% in the previous quarter with the renewal of seven leases. This represented 22.6% of the mall’s NLA, thanks to its new anchor tenant lease with Mr DIY.

In contrast, DBS Group Research noted that Causeway Point saw operational disruptions due to AEI works that were completed year end 2019. However, the mall is expected to see higher footfall once the underground pedestrian link connected to Woods Square will be completed in July.

Causeway Point will also benefit from the completion of the Thomson-East Coast Line’s first stage as Woodlands station will be one of the main interchange stations across the line. A further six stations are expected to commence operations this year, which is said to increase shopper traffic to Causeway Point in the coming few quarters.