COVID’s Retail Shake‑Up
Since the pandemic kicked off, Singapore’s retail REITs have felt the brunt—some like a dropped pizza topping, others more like missing the side‑dish.
What’s Been Happening?
- Circuit Breaker Chaos: From April to early June, malls nearly went dark.
- Safe‑Reopen Phases: Phases I & II saw a glimmer of life, but social distancing kept foot traffic low.
- Government’s New Playbook: Phase III could roll out by year‑end, loosening group limits to 8‑person gatherings.
- More Activities Set to Bloom: Bigger groups and normal operations are finally on the horizon.
Why REITs Cheer
More shoppers mean more sales, and that’s the sweet spot for the landlords embedded in the REITs’ portfolios. The next phase is music to their ears.
Spotlight on Two REITs
Frasers Centrepoint Trust
They own a string of suburbs malls—Causeway Point, YewTee Point, Anchorpoint, you name it. These places have some sturdy footfall potential once the crowd filters back.
Starhill Global REIT
With assets across Singapore, Australia, Malaysia, China and Japan, they’re not just living in one market. Their 10 properties include retail and office assets, giving them a multi‑regional safety net.
Revenue Hotspots
In the last fiscal year (ended June 30 2020), two Singapore malls—Wisma Atria and Ngee Ann City—steal the show: they accounted for 51 % of total revenue and 55.6 % of net property income.
Which REIT to Cheer For?
As the economy ticks back toward normalcy, investors take a closer look at these two. Which one offers the best return on your dough? That’s for you to decide, but the tick‑tock of reopening keeps the doors open.
Financial performance
Re‑thinking the REIT Showdown: Who Wins the Upside‑Down Battle?
At first glance, SGR looks like it did a pretty brutal annual slide – gross revenue and net property income (NPI) dipped harder than a chute‑hopper at a carnival. But hold the impulse to declare a champion just yet.
Why the Numbers Aren’t the Whole Story
- Different time frames: FCT was measuring its first half up until 31 March, the moment the dreaded circuit breaker opened.
- Revenue surge pre‑mall closure: FCT enjoyed a year‑on‑year uptick – a lucky break before all the malls locked up shop.
- SGR’s DPU slump: The property investment trust saw its distribution per unit sputter by a whopping 68.2 %. Why? Because its heavyweights held back money to ease tenant stress, and the $7.7 million owed to shareholders was nudged into the next fiscal year (June 30, 2021), a move sanctioned by Singapore’s Ministry of Finance and the Inland Revenue Authority.
What Matters Most? Shopper Traffic!
You might be wondering, “Who’s really doing better?” When the market’s heat‑measuring sticks are abandoned, a good alternative is to peek at the footfall. A building’s bustling crowd can signal real health better than the numbers on paper. Take a look at the foot traffic trends below—those are the folks who actually decide who wins.
Winner? Still a Pending Question
The final verdict remains inconclusive. Both REITs show different strengths: SGR’s solid tactics to keep tenants afloat vs. FCT’s timely heightening of revenue before the malls went sideways. For now, let’s keep an eye on the shoppers; that’s where the real drama unfolds.
Gearing and cost of debt
Who’s Got the Cleaner Wallet?
When we break down the last quarter of both REITs, a few gaps start to pop up. SGR is packing a heavier leaning on the debt side—its gearing sits noticeably higher than FCT. That means there’s less wiggle‑room for future acquisitions that rely on borrowed capital.
Government’s Safety Net Still in Place
In a 2023 move designed to keep the sector afloat during the pandemic, the Monetary Authority of Singapore lifted the maximum permissible leverage from 45 % to 50 %. Both SGR and FCT comfortably tick below that ceiling, so the short‑term risk is minimal.
Interest Shock
- SGR faces a steeper interest burden, which translates into higher finance charges.
- FCT enjoys a more affordable cost of capital.
All told, the odds tip in FCT’s favour.
Dividend yield
Dividend Distribution Duel: SGR vs. FCT
When we’re looking at how much cash each REIT pours into its shareholders, we zoom in on Distribution Per Unit (DPU). I took the most recent half‑year DPU from FCT, stretched it out to a full year, and lined it up against SGR’s annual DPU. The goal? A clearer, side‑by‑side look at who’s handing out the dough.
The Numbers (and the A‑to‑Z of Our Dance)
- SGR’s DPU gives a tidy 6.7 % yield. That’s like getting a steady paycheck while lounging in a pool of cash.
- FCT’s numbers? They’re a bit moody. The half‑year figure, when annualised, sits lower—so the real yield might stay sorely depressed if mall sentiment is still under the weather.
- But here’s a twist: SGR’s share price has stumbled about 40 % this year. That makes the yield look like a shiny beacon, but could hint at shaky business performance.
- FCT’s recent move—buying the last piece of the AsiaRetail Fund—adds five suburban malls to its lineup. This snap on the books could lift its DPU by roughly 8.6 % when measured against the 2019 fiscal year.
Why It Matters
Even though we’re not comparing apples to apples—one is half‑year, the other full‑year—this snapshot tells us which REIT offers more bang for the buck at the moment. SGR’s bigger yield feels like a knight’s noble cup—spouting more gold per share—while FCT’s recent expansion hints at potential future gains.
Final Verdict
To top it all off, we give the sash to:
Winner: SGR
Shopper traffic
Shopping Traffic Showdown: FCT vs. SGR
It’s time to roll out the red carpet and peek at how many folks are strolling through the malls run by the two REITs.
FCT’s Bounce‑Back in August
In August, FCT’s out‑and‑about malls breathed a sigh of relief. Patrons started dropping by again, and the footfall dropped less dramatically compared to a year ago—just a 36% dip.
SGR’s Road‑Map to Zero
Meanwhile, SGR’s malls told a different story. The quarter was hit hard by the circuit breaker, and shopper traffic fell a staggering 87% year‑on‑year.
Looking at the Low‑Points
- FCT’s April Low: Traffic down by 68.3%.
- SGR’s Sweltering Decline: A much sharper 87% plunge.
Why the discrepancy? It turns out SGR’s malls have fewer essential services and lean heavily on tourist trade. When tourists flee, the footfall takes a hit. FCT, on the other hand, offers more everyday staples, keeping shoppers coming back.
Big Reveal: FCT Wins the Mall‑Traffic Battle
When it comes to keeping the gates open and the sales up, FCT is the heavyweight champ.
Get Smart: Continue to monitor both REITs
FCT Wins the Mall Monopoly, SGR Tries to Keep the Scoreboard Fair
Picture this: Two retail giants, FCT and SGR, face off on the same mall turf, but one is pulling the crowd in like a detective on a stakeout, the other is chasing after tourists with a lasso. The winner of this round? You guessed it—FCT.
Why FCT’s Suburban Shops Reign Supreme
- Local love: FCT’s suburban malls are practically the town’s heart‑and‑soul. They attract folks from the rural hinterland, turning the local shopping experience into a community affair.
- No tourist drift: While SGR’s venues cater more to the jet‑set crowd, they miss that sweet spot of repeat local traffic.
Shrugging off Growth – No Acquisition Playbook from SGR
Unlike FCT, SGR hasn’t been on the hunt for property acquisitions to boost its DPU (Deployable Unit Production). FCT’s strategy? Game. SGR’s? Almost a silent rewind.
Office Space – SGR’s Game‑Changer
SGR does have an office component that helps cushion the Net Property Income (NPI) drop. This segment, however, represents less than half of total revenue and NPI, so it’s a decent safety net—just not enough to make headlines.
Upcoming Earnings Break‑downs
- FCT will reveal its full fiscal year 2020 earnings on Nov 3—time to see if the local boom carries through.
- SGR is set to drop a business update for its fiscal 2021 first quarter on Oct 28—just in time for the grocery line frenzy.
In short, if you’re looking to back a mall that feels like a family gathering, hit up FCT. If you’re intrigued by office spaces keeping the elephant in the room under its weight, SGR’s got that corner. Stay tuned—these dates are the real plot twists!
