The manager

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From left to right: Mr Bobby Chin Yoke Choong and Mr Jack Lam.

Dear Unitholders

We carried out several major projects and initiatives in FY2018 with the aim of strengthening and reshaping the portfolio for greater resilience, diversity and long-term growth.

Dear Unitholders,

FY2018 was an eventful and overall fruitful year for us as we carried out several important initiatives to continue strengthening and reshaping our portfolio for long-term growth. On behalf of Frasers Commercial Asset Management Ltd., as Manager of FCOT, we are pleased to present this Annual Report for FY2018.

Financial and Portfolio Performance

Distributable income totaling S$82.7 million was declared in FY2018, which was 5.2% above the amount in FY2017. This translated to distribution per Unit of 9.60 cents, which was marginally below the 9.82 cents per Unit in FY2017 due to the higher Unit base in FY20181.

FY2018 portfolio gross revenue of S$133.3 million was 14.8% lower year- on-year and portfolio NPI of S$89.3 million was 21.6% lower year-on-year. These lower performances resulted mainly from lower contributions from Alexandra Technopark, Central Park and China Square Central and the effects of the weaker Australian Dollar. Alexandra Technopark and Central Park were impacted by higher vacancies in the wake of lease expiries for key tenants including Hewlett-Packard Singapore Pte Ltd, Hewlett-Packard Enterprise Singapore Pte Ltd and BHP Billiton Iron Ore Pty Ltd. The financial performance of China Square Central was affected by the planned closure of the retail podium at 18 Cross Street for asset enhancement works. We will continue to carry out proactive leasing and asset management measures to normalise and improve the performances of the properties.

The foregoing FY2018 portfolio gross revenue and NPI figures are before contributions from a 50.0% interest in Farnborough Business Park located in the UK, which was acquired on 29 January 2018. The investment is held as a joint venture and generated attributable gross revenue and NPI of S$9.8 million2 and S$7.0 million2, respectively, in FY2018.

NAV as at 30 September 2018 was 1.59 cents per Unit3, which was stable versus 1.58 cents per Unit as at 30 September 2017.

Strengthening and Reshaping the Portfolio for Long-term Growth

We carried out several major projects and initiatives in FY2018 with the aim of strengthening and reshaping the portfolio for greater resilience, diversity and long-term growth potential.

In December 2017, we announced that FCOT’s investment mandate would be expanded beyond the Asia Pacific to include Europe4, with an initial focus on the UK. The UK presents a vast and well-institutionalised real estate market, and will greatly enhance our ability to provide portfolio diversification and long-term growth potential for FCOT.

Our maiden investment in Farnborough Business Park was a 50:50 joint venture with a subsidiary of Frasers Property. The acquisition for an agreed property value of £175.0 million (approximately S$322.9 million5), was completed on 29 January 2018. The award-winning business park, which is located in Thames Valley west of London, has strong fundamentals, including a high-quality tenant base and a long weighted average lease expiry of 7.5 years6. As at 30 September 2018, its occupancy was 98.1%.

On 31 August 2018, we completed the divestment of 55 Market Street to an unrelated third-party for a consideration of S$216.8 million, which implied an attractive exit yield of 1.6%7 and was almost three times the purchase price of S$72.5 million in 2006. The property was the smallest of our assets, and its monetisation unlocked significant value with a net gain of approximately S$75.7 million8 over the property’s net book value of S$139.9 million.

At Alexandra Technopark, the S$45 million asset enhancement initiative (AEI) which commenced in 1Q 2017 is nearing full completion and has received positive feedback from tenants, Unitholders and other stakeholders. The property has been transformed and repositioned to a contemporary and well-rounded business campus that offers an engaging, green and spacious environment augmented by a multitude of food and beverage, social and wellness amenities.

At China Square Central, a S$38 million AEI to rejuvenate and reposition the retail podium at 18 Cross Street commenced in January 2018 and is expected to complete in the second half of 2019. The project aims to create an exciting retail destination focusing on food and beverage, wellness and services. The net lettable area of the retail podium is expected to increase by 22.0% to around 78,000 sq ft9, which will further add to its income- generating potential. The retail podium is also expected to benefit from the expected opening of the new 304- room Capri by Fraser, China Square hotel10 in March 201911. Last but not least, we also expect that the Urban Redevelopment Authority’s newly announced Business Improvement District programme for the China Place precinct to bring further benefits to China Square Central.

Portfolio Value Increased 3.0%

Portfolio value increased to S$2.1 billion12 based on independent valuations of the properties as at 30 September 2018, up 3.0% compared to a year ago. The increase in portfolio value was mainly due to the addition of the 50.0% interest in Farnborough Business Park and the higher valuations for the Singapore properties. The portfolio value was partially offset by the divestment of 55 Market Street and lower translated values of the Australian properties due to the effects of the weaker Australian Dollar.

Proactive and Prudent Capital Management

In February 2018, gross proceeds of approximately S$100.0 million was raised from a private placement of 67,567,000 new Units at a price of S$1.48 per Unit (Private Placement), as part of the long-term financing for the 50.0% interest in Farnborough Business Park. The Private Placement was initially launched based on 55,556,000 Units and was subsequently upsized by 12,011,000 Units following good demand from investors. The Private Placement enlarged our Unit base and the free float of Units.

We continue to take a prudent and proactive approach towards capital management. In June 2018, a A$135.0 million term loan facility due in FY2018 was refinanced to FY2022. In September 2018, an aggregate of S$196.6 million of borrowings due in FY2018 and FY2019 were repaid using the divestment proceeds of 55 Market Street. With the foregoing financing activities undertaken, there is currently no major refinancing requirement until FY2020.

The repayment of S$196.6 million of borrowings as mentioned above has substantially lowered FCOT’s gearing level to 28.3% as at 30 September 2018, from 35.4% as at 30 June 2018. The current gearing level is well below the regulatory 45.0% limit for Singapore REITs. This provides a high degree of financial flexibility for the pursuit of new investments and other growth opportunities.

In addition, FCOT’s FY2018 average interest coverage ratio continued to be healthy at 4.0 times13 and interest rates for approximately 81.2% of borrowings as at 30 September 2018 is fixed or have been hedged, providing certainty in interest cost and protection from interest rate volatility.


Singapore’s Ministry of Trade and Industry expects the economy to grow by 3.0% to 3.5% in 2018, and by 1.5% to 3.5% in 201914. Against this backdrop, the outlook for the Singapore office market is generally positive. CBRE has expressed the view that healthy tenant demand coupled with limited future supply will lead to further rental growth in the medium term15. Following the recovery in office rents since the second half of 2017, there are now also higher rent expectations for well-located business park properties16. The above market trends bode well for China Square Central and Alexandra Technopark.

For Australia, the Reserve Bank of Australia expects the economy to grow by 3.50% each in 2018 and 201917. Caroline Chisholm Centre, which is wholly occupied by the Commonwealth of Australia on a long-term lease, will continue to provide stable income to the portfolio. We believe 357 Collins Street will also be highly defensive, given its high occupancy of 95.0% as at 30 September 2018 and the generally positive Melbourne office market. With regard to Central Park in Perth, we are cautiously optimistic of the outlook, as the city’s prime office segment is benefitting from improving business confidence and a flight-to-quality trend exhibited by office occupiers.

For the UK, the Bank of England’s Monetary Policy Committee expects the economy to grow by around 1.75% in 201818. There are currently uncertainties over business conditions in 2019 in light of Brexit in March 2019. Nonetheless, given the strong fundamentals of Farnborough Business Park and the continued attractiveness of Thames Valley as a well-established and cost-efficient location for businesses, we believe that the income performance of the property would be resilient19.


In conclusion, the Board would like to thank our Unitholders and other stakeholders, including the Trustee, tenants and service partners, for their strong and unwavering support. Our appreciation also goes out to the management team for their continued dedication and hard work in managing the Trust. We look forward to meeting with our Unitholders at the upcoming Annual General Meeting to be held on 18 January 2019.

Chairman and Independent
Non-Executive Director



Chief Executive Officer

  1. Inclusive of 67,567,000 new Units issued pursuant to the private placement which was completed on 1 February 2018 to part-finance the acquisition of 50.0% interest in Farnborough Business Park. Refer to the announcement dated 1 February 2018 for details.
  2. Amounts included reimbursements of lease incentives, rent guarantees for certain unlet units and other commercial arrangements performed by the vendor, in accordance with the terms of the acquisition (refer to announcement dated 14 December 2017 for details).
  3. Net of distribution income and assuming distribution income for the fourth quarter was fully paid in cash.
  4. Refer to the announcement dated 14 December 2017.
  5. Based on the exchange rate of £1.00 = S$1.8453 at the time of acquisition.
  6. Based on gross rental income as at 30 September 2018, which included reimbursements of lease incentives and rent guarantee for certain unlet units and other commercial arrangements performed by the vendor in accordance with the terms of the acquisition (refer to announcement dated 14 December 2017 for details). The weighted average lease to break calculated on gross rental income basis and reflecting contracted rights for tenants to pre-terminate leases, was 5.2 years as at 30 September 2018.
  7. Based on the annualised NPI of 55 Market Street for 3QFY2018.
  8. Net of transaction expenses and fees.
  9. Based on provisional scheme and may be subject to change.
  10. Refer to the Circular to Unitholders dated 3 June 2015 for details.
  11. Refer to Frasers Property’s announcement dated 10 April 2018.
  12. Portfolio as at 30 September 2018 included 50.0 % interest in Farnborough Business Park acquired on 29 January 2018 and excluded 55 Market Street divested on 31 August 2018.
  13. Excluding the gain on divestment of 55 Market Street of S$75.7 million. Including the gain on divestment, the interest coverage ratio would be 7.3 times.
  14. Source: Ministry of Trade and Industry Singapore, 22 November 2018.
  15. Source: CBRE, Singapore Market View, Q3 2018.
  16. Alexandra Technopark is a high-specification B1 industrial development located at the city-fringe, with certain physical attributes similar to business parks. In the absence of meaningful market research information directly relevant to the asset class of Alexandra Technopark, market research information for business parks is provided for indicative reference.
  17. Source: Reserve Bank of Australia’s Statement on Monetary Policy Decision, 6 November 2018.
  18. Source: Bank of England’s Monetary Policy Committee meeting held on 31 October 2018.
  19. For more information, please refer to Market Overview, Thames Valley and Farnborough Area, UK, by Jones Lang LaSalle dated 30 November 2018 which is included in this Annual Report.
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About our Manager

FCOT is managed by Frasers Commercial Asset Management Ltd., a subsidiary of Frasers Property Limited.

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Growth strategies

FCOT strives to become a leading owner of quality commercial real estate properties, a landlord of choice for businesses and a preferred investment choice among investors. This ambition is enabled by our unifying idea, which we share with our sponsor, Frasers Property Limited.

Executive Officers


Seated (from left to right): Ms Tricia Yeo, Mr Jack Lam and Ms Cheah Yoke Lan
Standing (from left to right): Ms Wang Mei Ling, Mr Vincent Lee, Mr Wong Soon Yean and Ms Janet Soh

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