SINGAPORE (Oct 26): OCBC is reiterating its “buy” call on Frasers Commercial Trust with a fair value of $1.59 after reporting a good set of 4Q results with room for improvement ahead.

In 4Q, gross revenue jumped 16.9% y-o-y to $37.2 million driven by higher income contribution from Alexandra Technopark and maiden contribution from 357 Collins Street. DPU rose 14.0% to 2.52 cents.

For FY15, FCOT’s gross revenue increased 19.6% to $142.2 million which made up 102.8% of OCBC’s full-year forecast, says lead analyst Andy Wong in a report out today.

DPU of 9.71 cents was an all-time high for FCOT, and represented a growth of 14.1%. This was also 2.5% above the bank’s forecast.

And there is still room for growth.

While FCOT’s management does not expect to see the same level of strong double-digit rental reversions in FY16 given the looming office supply in Singapore, OCBC notes that FCOT only has a low lease expiry of 7.7% as a percentage of total gross rental income in FY16 for China Square Central and 55 Market Street combined.

Growth in FY16 would be driven by built-in step-up rents for some of its leases and a full-year contribution from its recent 357 Collins Street acquisition.

“We believe management will also continue its policy of hedging 100% of its estimated distributable income from Australia on a 6-9 months rolling basis,” says Wong.