The refurbishment of Northpoint shopping centre trimmed retail income and profit for Frasers Centrepoint Trust (FCT), according to the third quarter statement of the trust’s manager, Centrepoint Asset Management (FCAM).
The trust’s gross quarterly revenue slipped 4.4 per cent to S$45.0 million, while property expenses fell 2.6 per cent to $13.9 million. Net property income for the quarter declined 5.1 per cent to $31.2 million, due mainly to lower contributions from Northpoint which is currently undergoing asset enhancement works, reported FCAM.
FCT is a real estate investment trust with six retail malls in Singapore: Causeway Point, Northpoint, Changi City Point, Bedok Point, YewTee Point and Anchorpoint. With a combined appraised value of $2.46 billion as at June 30, FCT malls enjoy wide captive markets, good connectivity and high occupancy.
During the quarter, 27 leases accounting for 4.6 per cent of FCT’s total net lettable area were renewed at an average rental reversion of 8.3 per cent, underpinned by robust renewal at Causeway Point, which accounted for 67 per cent of the net lettable area renewed during the quarter at an improvement of 9.4 per cent in average rental over the previous leases. The portfolio average rental reversion for the nine-months to June 30 was 10.9 per cent.
The figures were achieved despite an ongoing decline in retail sales across Singapore, which is clearly impacting on Orchard Rd and tourist-oriented retailers more than suburban centres. Shopper traffic across the portfolio during the quarter eased 0.4 per cent, and retailer-reported sales fell 1.8 per cent.
However the occupancy rate across all properties slipped marginally from 92 per cent to 90.8 per cent in the quarter, due mainly to the Northpoint refurbishment and transitional vacancy at Changi City Point.
CEO, Dr Chew Tuan Chiong, said, FCT continued to deliver steady performance during the quarter.
“We continue to maintain tight watch over our financial position and borrowing costs amidst these volatile times. We have fully refinanced the $264 million borrowing which was due in July, through new bank borrowings and a bond issue, and we have no refinancing remaining [this financial year].
The asset enhancement works at Northpoint are progressing on schedule. While the works have been phased to minimise income disruption, there will be impact to rental revenue for the mall.
The growth in the overall retail sector remains tepid, as seen in April’s 3 per cent year-on-year decrease in the Singapore retail sales index (excluding motor vehicle sales). Nevertheless, FCT’s well-located suburban malls are expected to remain resilient,” he said.