Bangkok--28 Jun--Moody's Investors
Moody's Investors Service has changed to stable from negative the outlook of Frasers Centrepoint Trust's ("FCT") Baa1 corporate family rating.
"The change in outlook reflects FCT's strong operating performance in the recent down-cycle, and which has been evidenced by continuous revenue growth and high level of occupancy," says Peter Choy, a Moody's Vice President and Senior Credit Officer.
"In addition, the occupancy rate of its key Northpoint Mall has improved, helping stabilize its financial profile with Debt/EBITDA at 6.5x and EBITDA/Interest at 4x, levels consistent with its current ratings," says Choy.
"FCT has also been able to draw on its MTN program to improve its debt maturity profile and capital structure," says Choy.
Moreover, FCT's Baa1 rating is supported by its stable income stream and high occupancy rate. These strengths are in turn evidence of the good quality and good locations of its suburban retail malls.
Moreover, Moody's recognizes the trust's close relationship with its strong and established sponsor, Frasers Centrepoint Limited, a wholly-owned property arm of the Fraser and Neave Group ("F&N").
This relationship allows FCT to leverage -- for the purpose of expansion
-- Frasers Centrepoint Limited's strong expertise in asset and financial management, its brand name, and extensive network.
On the other hand, the rating is constrained by FCT's current relatively high asset concentration and low level of financial flexibility due in turn to its high level of asset encumbrance.
As a result, upward pressure on the rating is limited.
On the other hand, FCT's rating could experience downward pressure if (1) it takes on an aggressive debt-funded acquisition strategy; and/or (2) the operating environment deteriorates, such that it suffers high vacancy rates and falling rentals.
In such a scenario, Moody's could consider a downgrade if Debt/EBITDA increased beyond 7x and EBITDA/interest dropped below 3.5x.
The last rating action was on 16 March 2009, when FCT's corporate family rating was confirmed with a negative outlook.
The principal methodology used in rating FCT was Moody's Rating Methodology for REITs and Other Commercial Property Firms, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory.
Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Headquartered in Singapore, Frasers Centrepoint Trust is a real estate investment trust ("REIT") focusing on investments in suburban retail properties in Singapore. It is sponsored by Frasers Centrepoint Ltd, a wholly-owned property arm of the Fraser and Neave Group ("F&N"), one of Singapore's leading shopping centre operators and developers with diversified interests in consumer goods, beer and serviced apartments under the Frasers Residence brand.
Hong Kong
Peter Choy
VP - Senior Credit Officer
Corporate Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Singapore
Philipp L. Lotter
Senior Vice President
Corporate Finance Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308