SINGAPORE (Sept 5): It's no wonder why Frasers Centrepoint Trust's Northpoint City and Causeway Point are two of the biggest malls in the northern region.
Given the two malls are well connected to MRTs and bus stations, they have been performing well with occupancy rates of over 98% and relatively consistent positive rental reversions.
And the outlook for the two malls appears bright.
Frasers Centrepoint Trust's Northpoint City has just completed its $60 million Asset Enhancement Initiative (AEI) in 1Q18 and Causeway Point will soon be linked via an underground pedestrian link to Woods Square.
This is expected to increase traffic flow into the mall when Woods Square is completed in 2020/21 as the link also provides a shorter underground link to Woodlands MRT station.
In addition, higher traffic flow for the mall is expected upon completion of Phase 1 of the Thomson-East Coast MRT line next year as Woodlands MRT station will be the interchange between the Thomson Line and the North South Line.
Northpoint City North Wing underwent an AEI which was completed in 4Q17 to integrate it with the newly built South Wing. While North Wing is much older than South Wing, analysts say it has caught up in terms of façade and tenant mix after the refresh.
"We visited the malls on a Tuesday at 3pm-5pm. Despite the non-peak hours, both malls had decent traffic, which is not a surprise given the high population density in Woodlands and Yishun," says CGS-CIMB Securities lead analyst Eing Kar Mei in a Tuesday report.
Northpoint City has two grocers and a lot of eateries, including three popular food courts. Together with South Wing, the mall also has two underground links to the Yishun MRT station. Although South Wing only opened in Dec 2017, it has achieved a high occupancy rate with good rentals.
In the next 12-24 months, South Wing will be connected to the upcoming Yishun bus interchange and will open a community centre, which should increase traffic flows too.
As for Frasers Centrepoint Trust, the owner and operator of the two malls, there are two retail properties owned by sponsor Frasers Property that could be injected into the retail REIT, says CGS-CIMB.
Eing says Waterway Point -- 33.3% owned by Frasers Property -- which is more mature compared to Northpoint City South Wing, should be ready to be injected into Frasers Centrepoint Trust.
"We understand that Waterway Point has an NLA of 371,800 and its occupancy rate stood as high as 99.9% as at Sept 2017. Valuation as at Sept 2017 was $1.148 billion," says Eing.
"We continue to like FCT for its resilient portfolio. We maintain our FY18-20 DPU forecasts but lift our FY21-22 numbers after factoring in stronger growth for Causeway Point and Northpoint, which raises our DDM-based target price. Upside risk could come from new acquisitions while a downside risk is weaker-than-expected rental growth," says Eing.
CGS-CIMB has an "add" with a $2.49 target price, giving it a forward dividend yield of 5.2% for FY19.
Year to date, units in Frasers Centrepoint Trust are up 1.8% at $2.30 as at 10.41am.
