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Frasers Commercial Trust kept at 'buy' with Street-high target price by DBS on back of lease signed with Google

Uma Devi
Uma Devi • 2 min read
Frasers Commercial Trust kept at 'buy' with Street-high target price by DBS on back of lease signed with Google
SINGAPORE (June 26): DBS Group Research is maintaining its “buy” call on Frasers Commercial Trust (FCOT) with a Street-high target price of $1.70, on account of its five-year tenancy lease deal with Google at Alexandra Technopark (ATP).
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SINGAPORE (June 26): DBS Group Research is maintaining its “buy” call on Frasers Commercial Trust (FCOT) with a Street-high target price of $1.70, on account of its five-year tenancy lease deal with Google at Alexandra Technopark (ATP).


See: Google Asia Pacific is new tenant at Alexandra Technopark

The average gross rent for Google is expected to be kept at ATP’s recent monthly signing rates of about $4 to low $4s psf, save for some step-ups that might occur in the lease.

Google will occupy one-third of ATP beginning CY2020, bringing the committed occupancy for the property to 93.7%, a hike from the figure of 59.2% recorded at end March.

DBS analyst Mervin Song says, “In our estimates, we had assumed occupancy for ATP would average 90% in FY21, versus the current committed occupancy of 93.7%. It appears our original occupancy projections of 75-85% over FY19- 20F are on the high side given the time taken to secure Google.”

“With additional income from Google, in our view there is a high likelihood FCOT will have a “clean yield” (without capital distributions) from FY21 onwards which should help close FCOT’s yield differential with its large-cap peers,” Ong adds.

As at 3.58pm, shares at FCOT are up 6 cents at $1.64, giving a FY2019F dividend yield of 5.9%.

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