On 25 October 2024, Frasers Centrepoint Trust (FCT) released the results for 2H2024 and FY2024 that ended on 30 September 2024.
The presentation slides contain a lot of insightful information, and they can be found on FCT’s official website.
Table of ContentsThe Usual Healthy Metrics From FCT
FCT reported strong portfolio performance that reflected healthy leasing demand, with retail portfolio occupancy at 99.7% and an average rental reversion at +7.7%.
Increased shopper traffic and sales for FY2024 saw higher numbers, with sales levels 20% above pre-COVID levels.
Stable But Elevated Cost Of Debt (4.1%)
Some aspects of REITs are easy to understand — shareholders want income to go up and expenses to go down.
The bulk of a REIT’s expenses are attributed to debt costs, which have spiked in recent years due to rising interest rates.
FCT management has stated that the cost of debt is expected to remain stable but elevated at around 4.1% for FY2025.
Despite the pivot of the fed rate during the September 2024 FOMC meeting, the cost of debt is a lagging indicator.
When maturing debts are refinanced during the subsequent financial years at the current rates, they will impact the average cost of debt. It is likely that we will only see the cost of debt go down in a year or two.
Meanwhile, the Fed is expected to lower rates to the 3.5% to 3.75% range in 2025 from the current 4.75% to 5% range.
Considering that FCT’s cost of debt had soared from 2.16% in 2021 to 4.1% in 2024, even a modest decline back to the 3% range for FCT’s cost of debt would be an enormous boost for FCT.
With all factors staying constant, when expenses (such as the cost of debt) go down, DPU goes up.
Significant Activities
