SINGAPORE (Oct 24): CIMB is keeping its “add” rating on Frasers Centrepoint Trust with a higher target price of $2.28, from $2.25 previously, despite a 1.5% dip in FCT’s 4Q distribution per unit (DPU).

Gross revenue for 4Q16 was $44.6 million, down 6% compared to the same period last year.

Northpoint and Changi City Point contributed lower revenues due to asset enhancement initiative (AEI) works at Northpoint and vacancy due to changeover in an anchor tenant at Changi City Point.

(See Frasers Centrepoint Trust declares DPU of 2.815 cents for 4Q, down 1.5%)

However, CIMB analyst Lock Mun Yee believes investor interest would pick up after the enhancement works at Northpoint are completed, and when FCT’s earnings and occupancies recover.

“[Northpoint’s] AEI is scheduled to end in Sep 17 and we understand there is good leasing interest post AEI,” says Lock in a report on Friday.

“We anticipate rental reversions to stay positive, although at a more moderated pace given the difficult retail environment,” she adds.

Lock says FCT’s low gearing at 28.3% provides headroom for expansion both locally and overseas. In addition, its sponsor has two assets that could be injected when stabilised.

As at 11.47am, units of Frasers Centrepoint Trust is trading flat at $2.13.