Frasers Property (formerly: Frasers Cpt (FCL))

[piggo]

My bad it's ~300m this FY... But should be common sense.

[I_love_girls]

This only two digits per quarter roughly! That is just average man! I thought it will at least be 100 - 200 million per quarter

My bad it's ~300m this FY... But should be common sense.

[thor666]

I've updated my notes.

Link

[I_love_girls]

Thanks! Hope can Huat on Monday! Huat all the way by holding FCL shares! Singapore residential sales are going downhill, hope that Australia's sales will paint a good picture.

[Contrarian]

Bro, your notes are very good.

- Concerns on gearing. (CEO)
Mgmt highlight historical records, no right issue raised during gfc, property is capital-intensive business. Gave example, post GFC FCL was 1.1X debt gearing. Prior to Australand acquisition, gearing was 0.4X. In between, unlike other companies, FCL did not issue rights issue.
- Questions on australand being asked. (CEO)
Management thinks the overall revenue from australand will be quite good.
AU has around 150-200K housing development/year. In AU, the inner city is where a lot of developers go into, FCL consider it a shallow (small portion) of the market. FCL wants to target the mid-tier outer region of housing development (mid market) where the market is deeper and Australand able to sell more units.
Australand has been taking land bank options with partners for efficient use of capital (pay a small portion to assess the viability/profitability of project before proceeding with heavier investment later)
- Chairman huge ownership and board representation
The shareholder hinted on the merits of a reduced stake from charoen and a more diverse board. Charoen through his son-in-law, said "they understand this is to the benefit of the company", and could work towards it "near future".
- Regarding Segment Information (AR section 13, page 146-147)
Corporate & Other exceptional items - due to Premium payment for F&N bonds
AUstraland loss - but to Transaction costs (payment of Australand stocks and bonds etc).

- CEO also said Singapore property price is ALWAYS on the uptrend in the long term. His statement shows he is making a judgment based on past history...


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[I Love You]

Thanks for the notes!!!
Was planning to go for the meeting, but last minute need to work
Was wondering how will Fraser lower their gearing.
So, need to expect next year's interest expense to be around $210mil ($7tri x 3%)?

[CY09]

Not to be cynical here but FCL can lower its gearing rather easily.

As of now, it has 400M recurring income from REITS and Asutraland and the collection of cash from its Singapore residential projects. If one notices, FCL has a lot of trade and other receivables as well as $5 Billion worth of "properties held for sale"; Majority of its Singapore development projects will be completed by 2016, with the cash collected, FCL will be able to pare down their debts quickly.

In addition, if FCL needs to pare down gearing urgently, it can look no further than throwing its "valuable assets" to one of its REITS. FCL still holds valuable properties like The centrepoint* (worth s$650M) and Northpoint & Waterway point (still underdevelopment) which can be easily sold off to Fraser Centrepoint trust. Similarly, it has office complexes such as Alexandra Point ($289M), Changi City Office and 51 Cuppage Road which can be offloaded to Fraser Commercial.

During each financial year, it can help its REIT "grow" by selling off a property to them. I am sure many unit holders of FCPT (gearing 29.3%) and FCT (gearing 37.2%) will be happy to know that their REITS are growing the asset portfolio and at slightly "yield accretive rates" in times of market condition where the cost of debt financing is cheap. Furthermore as FCL holds less than 50% shareholdings of each trust, their accts are not consolidated if I am right. In the end, FCL will look like a very asset light/debt free company which gets recurring income of s$400m.

I believe that is the intent of the chairman where he intends to position FCL to be an asset light company by spinning off its investment properties after completion. FCL looks to be in the position of Capitamall Asia/Capitaland and I believe it may end up being delisted as soon as its investment properties receive TOP.

*For the Centrepoint, my gut feel is that it will be sold to FCPT only when new tenants come in because its occupancy is now at the low 60%. It is likely to only happen in late 2015 or 2016 where FCPT occupancy returns to above 95%. In addition, The Centerpoint is part freehold property^, so it is possible for the freehold portion to be sold to FCPT on a 99 year lease, similar to Paragon. After all, what would Fraser Centrepoint trust be without "The Centrepoint" in its portfolio

(not vested in any fraser stocks)

* Also I notice there are some posts on Eastpoint Mall. I will like to highlight East Point mall is owned by NTUC income but managed by Fraser, so the financial impact of lower occupancy is not too much of an issue for Fraser.

^To follow up on Thor666 Statement, it is part owned by URA if I am right. I checked the land ownership on Onemap. Think URA may have subleased to FCL (Land Lot: TS27-00854M). For others info, Changi City point is JTC owned but FCPT has a sublease of 60 years

[thor666]

Cy09 and all, a bit of additional trivia:
- the centrepoint is actually made up of 2 parts. One owned by fcl, the other owned by another party. Was mentioned in agm. Fcl is looking to redevelop centrepoint (i believe that was what eric was angry about) so the centrepoint is unlikely to be sold away in any near future.
- I think chaoren has bigger plans tham to delist fcl. Suspect he wants to overtake capitaland and beyond, as a new empire for his generations to come. My guess is that fcl will expand to more areas within their triple core, sg, au, cn, aggressively over decades. This is a very, very long play for those interested.

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[Contrarian]

The selling to REITs will depend on (i) gearing (ii) yield of assets

Some assets like centrepoint yield is not high enough, hard to justify selling to REIT. And the gearing of most FCL REITs is close to 40%, the REITs gearing will have to go past 45% or they need new share placement.

The biggest possibility is creating a NEW INDUSTRIAL REIT, as the yield in Australand is ~ 8% and industrial assets is > S$1bn. There is TCC thai industrial assets as well. So Charoen will likely include his TCC industrial assets together with some australand assets. So Charoen can get payout for his thai assets, up FCL profits, reduce FCL gearing, and maintain dividends.

> I believe it may end up being delisted as soon as its investment properties receive TOP

This is an interesting point. Now is a bit early as Charoen need to offload thai assets first. And he still owe bank money from his acquisition buys.

Just my 2 cts guess.

Greengiraffe, cityfarmer, piggo, thor666 and Other gurus, please give your views.

[Contrarian]

> One owned by fcl, the other owned by another party

Bro thor666, is that Eric one of the parties that own centrepoint. Is he the Eric Tay from propnex advertising for tenants?