Frasers Commercial Trust (FCOT)

[KopiKat]

Quite a good set of result yesterday. Extracts from press release,

Mr Low Chee Wah, Chief Executive Officer of the Manager, said “We are pleased to have achieved a 23.2% increase in DPU for this quarter. The key drivers for this robust performance were the acquisition of the other 50% interest in Caroline Chisholm Centre, full quarter revenue contribution from China Square Central after expiry of the master lease, and the reduction in interest expense following the refinancing and partial prepayment of the A$105.0 million loan facility. On a year-to-date basis, DPU was 16.8% higher than the same period last year as a result of the good performance of the last few successive quarters.”

News Release
Presentations
Financials

The uncertainty due to ThaiBev possibly taking over the driver seat is making me lose sleep. As such, I have taken the opportunity to reduce my holdings substantially today when prices recovered to recent highs. I know that fundamentally, nothing has changed... yet. What to do.. As long as I sleep well.. don't care even if it goes up further...

[lonewolf]

The uncertainty due to ThaiBev possibly taking over the driver seat is making me lose sleep. As such, I have taken the opportunity to reduce my holdings substantially today when prices recovered to recent highs. I know that fundamentally, nothing has changed... yet. What to do.. As long as I sleep well.. don't care even if it goes up further...

I guess it doesn't take much to make you lost sleep, KK

Personally though I'm invested in both Frasers Trusts, that possibility has not factored into my equation.

My take is that ThaiBev is not interested in F&N per se. And even if they were, I dun see why they would want to interfere into 2 successful managed REIT. So unless and until I see external interference that may impart the REIT's managers ability to do their job, I will continue to stay invested.

(Side note: FCT is the best REIT performers since IPO in my portfolio. Amazingly, it has never carried out a single rights or PO before)

(Side note 2: I was allocated a large chunk during ThaiBev IPO and divested in 2008 at a modest loss after losing patience with its stock performance. On hindsight divesting was a good move. I would have waited till this yr for it to move above my divested price)

[KopiKat]

(Side note 2: I was allocated a large chunk during ThaiBev IPO and divested in 2008 at a modest loss after losing patience with its stock performance. On hindsight divesting was a good move. I would have waited till this yr for it to move above my divested price)

Reading this alone is enough to keep me awake tonight...

FCOT report from OCBC to support your case,

MORE TO COME

- Good 3QFY12 showing
- Healthy operating numbers
- Expecting interest savings

3Q results were within expectations
Frasers Commercial Trust (FCOT) turned in a strong set of 3QFY12 results last evening. NPI and distributable income were up 7.1% and 16.7% YoY to S$26.6m and S$15.6m respectively. DPU for the quarter came in at 1.70 S cents (+23.2% YoY), after netting off S$4.7m in distribution to CPPU holders. For 9MFY12, DPU totaled 4.94 S cents, representing a growth of 16.8%. This is roughly in line with our estimates, given that it formed 73.1% of our full year DPU forecast.

Improvement from all fronts
The robust quarterly performance was mainly driven by the acquisition of the balance 50% interest in Caroline Chisholm Centre (CCC) and higher income from direct tenant leases at China Square Central (CSC) following the expiry of the master lease. Leasing activities within FCOT’s portfolio has also remained robust. Overall portfolio occupancy as at 30 Jun was at 96.7%, up marginally from 96.1% in the previous quarter, thanks to improved occupancy rates at its Singapore and Australia properties. FCOT also secured a number of lease renewals during the quarter, such as leases with Cerebos Pacific at CSC. Together with long-term lease at CCC, the portfolio weighted average lease to expiry was strengthened to 4.2 years, up from 3.4 years in 2Q.

Retain BUY, raising FV to S$1.16
Management also updated that it has successfully completed the early refinancing of its S$500m term loan facility using two new facilities (S$320m and S$185m loans). Notably, blended interest margin is ~1ppt lower than its previous borrowing margin. Hence, we expect FCOT to gain from interest savings going forward. We also understand that unitholders had approved the sale of KeyPoint. We believe FCOT may possibly use the proceeds to redeem 50% of its CPPUs and pare down its debts, given that its aggregate leverage is at 39.5%. After factoring in the results and redeployment of KeyPoint sale proceeds, our fair value is now raised to S$1.16 from S$0.97 previously. Maintain BUY on FCOT.

[smallcaps]

China Place:

http://www.greatnewplaces.com/t-Far%20East

[KopiKat]

Results of Conversion of Series A Convertible Perpetual Preferred Units and Preferred Distribution Payment Date

I wonder what's the motivation to convert the CPPU @ S$1.1845 when the Main share is trading at a lower price ($1.13 today but was lower during cut-off date) and CPPU is above the $1 par value ($1.03 today).. Even after factoring in the difference for the coming Sep-12 DPU, CPPU = 2.75ct vs FCOT 3.xct(?)... Did I miss something..

[Nick]

Results of Conversion of Series A Convertible Perpetual Preferred Units and Preferred Distribution Payment Date

I wonder what's the motivation to convert the CPPU @ S$1.1845 when the Main share is trading at a lower price ($1.13 today but was lower during cut-off date) and CPPU is above the $1 par value ($1.03 today).. Even after factoring in the difference for the coming Sep-12 DPU, CPPU = 2.75ct vs FCOT 3.xct(?)... Did I miss something..

Dividend Yield:

CPPU: 5.50 / 103 = 5.34%
FCOT: 6.58 / 113 = 5.82% (Annualized 9M 12 DPU)

Considering FCOT has a lot of room to grow its DPU organically with the proceeds of keypoint sale and purchase of 50% stake in the aussie property, it makes more sense to convert now (for a more liquid instrument and potentially higher yielding one) ?

(Not Vested)

[KopiKat]

Results of Conversion of Series A Convertible Perpetual Preferred Units and Preferred Distribution Payment Date

I wonder what's the motivation to convert the CPPU @ S$1.1845 when the Main share is trading at a lower price ($1.13 today but was lower during cut-off date) and CPPU is above the $1 par value ($1.03 today).. Even after factoring in the difference for the coming Sep-12 DPU, CPPU = 2.75ct vs FCOT 3.xct(?)... Did I miss something..

Dividend Yield:

CPPU: 5.50 / 103 = 5.34%
FCOT: 6.58 / 113 = 5.82% (Annualized 9M 12 DPU)

Considering FCOT has a lot of room to grow its DPU organically with the proceeds of keypoint sale and purchase of 50% stake in the aussie property, it makes more sense to convert now (for a more liquid instrument and potentially higher yielding one) ?

(Not Vested)

Why not sell CPPU and buy FCOT in the open market? CPPU Vol is too illiquid?

[Nick]

Results of Conversion of Series A Convertible Perpetual Preferred Units and Preferred Distribution Payment Date

I wonder what's the motivation to convert the CPPU @ S$1.1845 when the Main share is trading at a lower price ($1.13 today but was lower during cut-off date) and CPPU is above the $1 par value ($1.03 today).. Even after factoring in the difference for the coming Sep-12 DPU, CPPU = 2.75ct vs FCOT 3.xct(?)... Did I miss something..

Dividend Yield:

CPPU: 5.50 / 103 = 5.34%
FCOT: 6.58 / 113 = 5.82% (Annualized 9M 12 DPU)

Considering FCOT has a lot of room to grow its DPU organically with the proceeds of keypoint sale and purchase of 50% stake in the aussie property, it makes more sense to convert now (for a more liquid instrument and potentially higher yielding one) ?

(Not Vested)

Why not sell CPPU and buy FCOT in the open market? CPPU Vol is too illiquid?

Ahh this didn't cross my mind. The trading vol of FCOT CPPU is 17.5 lots today and the average daily 3 month volume is 9.5 lots. The sale of 1.0 million CPPU units will take a long time and incur unnecessary brokerage fees.

[sansan88]

It looks even stranger when u consider the CPPU has been trading at 1.03 and 1.04 for the past few months. The manager has the right to redeem the CPPU at par now and with the dpu at 2.75 cts, adding up to only $1.0275 without even factoring brokerage fees. Any reason why people throwing away money like that?

Results of Conversion of Series A Convertible Perpetual Preferred Units and Preferred Distribution Payment Date

I wonder what's the motivation to convert the CPPU @ S$1.1845 when the Main share is trading at a lower price ($1.13 today but was lower during cut-off date) and CPPU is above the $1 par value ($1.03 today).. Even after factoring in the difference for the coming Sep-12 DPU, CPPU = 2.75ct vs FCOT 3.xct(?)... Did I miss something..

Dividend Yield:

CPPU: 5.50 / 103 = 5.34%
FCOT: 6.58 / 113 = 5.82% (Annualized 9M 12 DPU)

Considering FCOT has a lot of room to grow its DPU organically with the proceeds of keypoint sale and purchase of 50% stake in the aussie property, it makes more sense to convert now (for a more liquid instrument and potentially higher yielding one) ?

(Not Vested)

Why not sell CPPU and buy FCOT in the open market? CPPU Vol is too illiquid?

Ahh this didn't cross my mind. The trading vol of FCOT CPPU is 17.5 lots today and the average daily 3 month volume is 9.5 lots. The sale of 1.0 million CPPU units will take a long time and incur unnecessary brokerage fees.

[HitandRun]

My guess is that perhaps the holder of the CPPU was worried that the manager might redeem the CPPU during the trading halt period.....