Frasers Centrepoint unfazed by escalating retail headwinds

Thanks to its strong suburban mall portfolio.

Frasers Centrepoint is well-poised to ride out the current retail market downcycle, according to a report by RHB.

RHB says that FCT is cushioned by its portfolio of suburban malls, which continue to enjoy strong consumer demand even as sales dip elsewhere in the island.

"Given its strong retail dominance within Northern Singapore, we expect the REIT to register positive rental reversion for both Causeway Point and Northpoint, which constitute more than half of the total renewals in FY16," said the report.

"As a substantial number of leased areas within FCT’s portfolio (30.7%) is to be renewed in FY16, we see potential organic growth for its portfolio. Of the leased area, 78% of the renewals would be due in the REIT’s largest malls, namely Causeway Point (CWP), Changi City Point (CCP) and Northpoint (NP). We are optimistic that these malls are likely to boost the overall rental rates for FCT, as these malls continue to book in respectable positive rental reversions from 5.7-9% in FY15,” said the report.