Still reeling from the losses realised from my ill-advised venture into Lippo Malls, I have decided to re-invest the sale proceeds plus a bit more into Frasers Commercial Trust.
1) I believe office space rents have bottomed out and recovery is underway. And we should start seeing positive rental reversion from 2019 onwards.
2) I like the asset quality of FCOT. For instance, their Central Park property in Perth counts Rio Tinto, DLA Piper and the Australian Stock Exchange amongst its tenants. The Caroline Chisholm Centre has the Australian Government as a tenant with a lease expiring only in 2025. There is substantial stability and income visibility.
3) The current share price already takes into account the departure of HP from Alexandra Technopark, which is now undergoing AEI. Given management track record, I believe they would be able to increase the occupancy rates of their Singapore assets. In particular, any newly executed leases would be concluded under increasingly favorable market conditions.
Accordingly, I have initiated a small position into FCOT, 43000 shares, at $1.37 a share. Fingers crossed and onwards to FI my brethren!