Dividend Yield: 2008 - 11.2%, 2009F - 10.7%
Debt Maturity Profile: 2009 - $62m 2010 - $0, $2011 - $260m
1Q09 results were in line with Street and our expectations. DPU for 1Q09 was 1.67cts, 24% of our full-year forecast. Gross revenue of S$19.5m deteriorated 3.2% yoy due to planned asset enhancement work at Northpoint. Additionally, property expenses increased 7.5% on higher property taxes. However, net property income margins improved to 65.9% from 63.8%, supported by doubledigit growth in rental reversions for Causeway Point (+18.9%) and Anchorpoint (+17.5%). Portfolio occupancy climbed to 88.7% from 87.7% in 4Q08 as occupancy at Northpoint improved despite ongoing asset enhancement work.
A 40% property tax rebate for commercial buildings has been announced in Budget 2009. Management will be passing on the rebate benefits to its tenants. While this will not result in DPU improvements, it should help to retain tenants, who are facing increasingly difficult retail sales.
We maintain our DPU estimates. The government’s fiscal measures and management’s decision to pass on tax-rebate benefits to tenants should support tenants’ business sustainability in the short to medium term. FCT remains our preferred pick for suburban retail exposure for its lower 0.52x P/BV vs. CMT’s 0.6x. Maintain Outperform.
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