FCOT – AmFraser

Results in line. FCOT’s Q114 performance is in line with our expectations, with revenue only 0.8% higher than our estimate and DPU of 2.05c forming 23% of our full‐year forecast. Revenue for the quarter was marginally lower on a YoY basis. This was a result of the weaker Australian dollar and slightly lower occupancies for Central Park, which was partly cushioned by positive rent reversions and improved occupancies at 55 Market St and China Square Central (CSC).

Poised to achieve positive rent reversions. Underpinning our optimistic rent outlook, FCOT achieved another strong quarter of performance in occupancy and rent reversions. FCOT recorded an occupancy rate of 97.1% and rent reversions of up to 20.2%. Noting the recent opening of the Telok Ayer MRT station, we believe this enhances accessibility to CSC and could potentially improve CSC’s ability to fetch higher rents.

Majority of CPPUs redeemed. At present, 99.9% of the Series A CPPUs had either been converted or redeemed, leaving only approx. 0.2mil CPPUs outstanding. As the CPPUs are held at an interest cost of 5.5%, interest savings associated with the redemption of the CPPUs would provide another upli