The reporting season begins this week! Five of my counters are reporting their latest results this week: Frasers Centrepoint Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Intuitive Surgical and Microsoft.
First off the block is Frasers Centrepoint Trust. Initially, I have wanted to combine the report with MLT and MINT, but since I was able to listen to the audio cast of investors’ briefing and jot down my thoughts last night, I decided to publish this short post first.
It is another steady quarter from the pure Singapore retail trust. There’s really nothing not to like in terms of its operating performance. Great occupancy with increasing traffic and tenant sales (adjusted), and general upwards trajectory of suburban prime retail rents. While no number is shared on rental reversion, CEO Richard mentioned that demand is strong and hence they do have pricing power.
The strong operating performance will probably be negated by increasing cost of borrowing. The good news shared during the investors’ briefing is post December FOMC, the group has entered new hedges at a rate lower than 4%. That increases the percentage of hedges to fixed rate interest from 63% to 72%.
This might not bring down the overall rate as compared to FY2023, but it does mean that the cost of borrowing is stabilising. Coupled that with the strong operating performance, I do think there should not be nasty surprise in terms of DPU when announced in the next quarter.
I will holding on to my current stake in FCT.
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