According to Frasers Centrepoint Trust (FCT), it is planning to purchase malls in Malaysia to diversify its business and is confident of maintaining historical revenue growth rates.
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FCT, which has four suburban malls in Singapore, reported a 7.5-percent annual compounded gross revenue growth since listing in 2006. During this period, distribution to shareholders increased 5.7 percent per unit each year, on average.
“Looking at revenue trends and looking at rental reversions, in general, we think that this is quite a sustainable trend,” said Mr. Chew Tuan Chiong, CEO of FCT.
“There was growth even during the downturn and right now, things are looking bright,” he added.
He said that as rents at existing malls are below the market average, rental income could increase, although he added that FCT opted to “put less pressure” on tenants.
Recently, the property trust renovated one of its malls called Northpoint, which is already enjoying a higher stream of rental income. Since the renovations, rental rates at Northpoint have risen by about 20 percent, he said.
Most analysts have a “buy” recommendation on FCT, preferring it over rivals like Suntec and CapitaMall Trust because of the greater potential for rental increases.
The possible injection of new properties by parent Fraser and Neave, a property, beer and soft drinks conglomerate, will also benefit FCT.
Mr. Chew, who joined FCT two months ago, said the trust will seek acquisitions from third parties and purchase malls with stable income streams from its parent company.
“We are quite interested in Malaysia because we have very similar operations parameters,” he said.
FCT now owns a 31-percent stake in a Malaysian-listed REIT, Hektar REIT, and Mr. Chew said that the Singapore property trust is ready to invest directly in Malaysian malls.
FCT intends to keep its focus on suburban malls in Singapore, because unlike swankier malls along the Orchard Road shopping belt, which rely largely on tourism, they command steady rents.