We are pleased to present to you FCT's Annual Report and ESG Report for the financial year 2024. This year has been transformative for FCT, marked by significant achievements and strategic initiatives that strengthened FCT's portfolio, financial resilience and the foundation for future growth.

REVIEW OF FY24 PERFORMANCE

Healthy results backed by robust operating performance

FCT's portfolio has delivered a healthy set of results in FY24 backed by robust operating performance. FY24 gross revenue was 4.9% lower y-o-y at $351.7 million and NPI declined 4.6% to $253.4 million. The decreases were due to lower contribution from Changi City Point which was divested in October 2023 and from Tampines 1 due to the AEI works in FY23 and FY24.

Excluding these two factors, FY24 gross revenue and NPI were 3.5% and 3.4% higher, respectively. The retail portfolio properties saw broad-based improved income performance underpinned by better average rental reversions and stable occupancy. Distributions from joint ventures in FY24 were 29.3% higher y-o-y mainly due to higher contribution from NEX with the completion of the additional 24.5% effective interest in NEX on 26 March 2024. Distribution to Unitholders for FY24 was $214.3 million. This translates to a DPU of 12.042 cents for FY24, a slight decrease of 0.9% compared to 12.150 cents in FY23 mainly due to the larger base of total issued and issuable units. FCT's financial position remains healthy with aggregate leverage 38.5% as at 30 September 2024, which improved 0.8%-points from 39.3% last year. The average cost of borrowing for FY24 was relatively stable at 4.1%. There is no refinancing risk in FY25 as the Manager has completed the refinancing of all its borrowings due in FY25.

The aggregate appraised value of FCT's portfolio saw a 1.2% uplift to approximately $7.0 billion. All malls saw stable or slight improvements in appraised values. In particular, the appraised value of Tampines 1 improved the most by $37.0 million after the completion of the mall's AEI.

During the year under review, FCT's portfolio registered a robust set of operating performance. The portfolio's committed occupancy stood at 99.7%, unchanged from last year. The average portfolio rental reversion for FY24 was +7.7%, compared to +4.7% in FY23. With healthy leasing demand for the prime retail spaces which our malls offer, our leasing teams were able to curate and introduce fresh retail offering to attract shopper traffic and drive tenants' sales. A total of 114 new-to-FCT brands opened at our malls in FY24. The portfolio shopper traffic and tenants' sales in FY24 grew 4.2% and 1.2% year-on-year, respectively. With improved tenants' sales, average occupancy cost for the retail portfolio remains healthy at 16.0%, providing headroom for further rental growth.

HIGHLIGHTS IN FY24

FY24 has been an eventful year marked by several achievements, which have helped to raise FCT's profile among investors and in the SREIT market.

Acquisition of an additional 24.5% interest in NEX

We completed the acquisition of an additional 24.5% interest in NEX on 26 March 2024. This acquisition followed from our initial acquisition of 25.5% interest in NEX in February 2023 and raised FCT's effective interest in NEX to 50.0%. NEX is one of Singapore's largest suburban retail malls and has delivered excellent financial and operational performances. The acquisition was in line with the Manager's portfolio reconstitution strategy to enhance FCT's portfolio resilience and to diversify its income base, with growth opportunities through AEI, tenant remixing and rent improvement at NEX. In connection with the acquisition, FCT raised approximately $200 million from equity fund raising via private placement. The private placement was 2.5 times covered with strong participation from new and existing institutional, accredited and other investors.

Completion of Tampines 1 AEI on schedule and outperforming ROI target

FCT completed AEI works at Tampines 1 in August 2024 on schedule after 15 months since its commencement in May 2023. The AEI rejuvenated the mall and elevated retail experience for shoppers in many ways. The retail offering of the mall was enhanced with the introduction of 68 new-to-mall retail and F&B concepts including Sinpopo, Tiong Bahru Bakery, Hawkers' Street and Love, Bonito. The AEI also added and deployed more than 9,000 sf of net lettable space to prime retail floors, improved floor space configuration and rejuvenated common areas such as the walkways and restrooms. Shoppers were excited with the refreshed Tampines 1 and the mall saw strong recovery in its traffic and tenants' sales as the AEI approached completion. The Tampines 1 AEI achieved a return on investment higher than the target of 8% on capital expenditure of $38 million.

Inclusion in the Straits Times Index

FCT joined the Straits Times Index (STI), the benchmark index of the 30 largest listed companies on the Singapore Exchange, on 18 March 2024. The inclusion of FCT as a STI constituent marked a significant milestone and stood as a testament to FCT's progressive growth journey over the years. More importantly, this will enhance FCT's profile among the investors in Singapore and globally.

MOVING FORWARD ON THE ESG JOURNEY

For the fourth consecutive year, FCT achieved 5-Star rating in the 2024 GRESB Real Estate Assessment. FCT also received an “AA” rating from the MSCI ESG Research in 2024, an improvement from the “A” rating in the previous year. The Manager works closely with the sustainability teams at Fraser Property Group in implementing its ESG projects and initiatives.

Rolling out Singapore's first-of-its-kind food waste valorisation system

During the year, we have completed several key ESG-related projects. In January 2024, we rolled out Singapore's first-of-its-kind food waste valorisation system across five¹ of our properties in FCT's portfolio, following the successful seven-month food waste upcycling pilot project at Causeway Point. The food waste valorisation system transforms food waste into commercial grade fish feed using reactive oxygen technology developed by our technology partners. We expect the implementation of the food waste valorisation programme at the five malls to potentially reduce 2,200 tonnes of food waste and 660 tonnes of carbon emissions. We plan to extend this program to our other portfolio malls in time to come.

Completion of Singapore's largest single solarisation roll-out for retail malls

Another significant ESG milestone was the completion of the solarisation roll-out for six of our malls this year. We partnered with the SP Group to install nearly 4,500 sqm (approximately 48,000 sf) of solar panels across seven of Frasers Property's assets in Singapore, comprising six retails malls owned by FCT and a commercial property owned by another Frasers Property-related entity. This is also Singapore's largest single solarisation roll-out for retail malls and is part of Frasers Property's group-wide ESG goal to install 215 MW of renewable energy capacity at its properties by 2030. This project is projected to save about $153,000 in energy costs and 293 tonnes of carbon emission annually for FCT.

Expanding community engagement and strengthening inclusivity

FCT continues to expand its efforts in community engagements and collaborations with its retail partners to strengthen inclusivity and experiences for members of the community with different needs. For example, under Frasers Property's Inclusion Champions Programme, our malls work closely with retailers from 31 brands across 104 stores to designate outlets as dementia go-to points and to implement 'calm hours' for persons with sensory needs. Another community engagement initiative is the 'Paint it Forward' event, an art jamming event that champions inclusivity and diversity and it is part of Frasers Property's wider 'Art For Good' campaign. The 'Paint it Forward' event in 2024 raised a total of $100,000 and the funds were donated to Community Chest Singapore in support of the art programmes for persons with disabilities.

We invite you to read further details in the ESG Report which is an integral part of this Annual Report.

GROWING FROM STRENGTH TO STRENGTH

Since FY18, FCT has undergone significant portfolio reconstitutions that enabled its portfolio to grow 2.5 times in AUM from approximately $2.8 billion in FY18 to $7.1 billion in FY24. This was achieved through a series of acquisitions amounting to nearly $4.8 billion and the divestment of non-core assets. The most recent acquisition of the additional 24.5% interest in NEX is another testament to FCT's strategy of focusing on Singapore prime suburban retail sector and growing through combination of acquisition, AEI and organic routes. This strategy has enabled FCT to navigate through economic cycles and the COVID-19 pandemic and to grow from strength to strength.

Hougang Mall AEI

Looking ahead, we anticipate another exciting year in FY25, as we embark on the AEI at Hougang Mall and maintain our focus on the asset and property management of FCT's portfolio. The $51 million AEI at Hougang Mall will commence in the second calendar quarter of 2025 and is projected to complete in the third calendar quarter of 2026. The AEI aims to create a refreshed retail experience with the introduction of new retail brands and services, space re-configuration and unlocking of value. The projected ROI of the AEI is approximately 7%.

Exciting developments and new homes in the North Region present opportunities for Causeway Point and Northpoint City

In addition, the Government² has also announced plans³ for 14,000 new homes in Woodlands North Coast and Sembawang North, in addition to the existing plan for 10,000 new homes in Woodlands. Plans are also in the pipeline for 8,600 new homes to be added to Yishun and Sembawang between 2024 and 2029, and to build a new residential estate Chencharu with 10,000 new homes by 2040. This implies a potential of a total of 42,600 homes to be added in the North Region over the near and long-term.

The other significant development in the North Region is the Johor Bahru-Singapore Rapid Transit System (RTS), scheduled to commence in end-2026. The commencement of the RTS provides an additional mode of transport for commuters and travellers between Johor Bahru and Singapore, with potentially shorter travel time. It also raises concerns about potential loss of sales for Singapore retailers and mall operators as more Singaporeans could choose to spend and dine in Johor Bahru given the strength of the Singapore dollar. We understand these concerns. We have conducted research on the potential impact and scenarios, held conversations with our retailers and F&B operators and kept close watch on the situation.

We believe Causeway Point is well-positioned as the connection hub in the Woodlands region for the RTS travellers and the working population, in addition to the residential catchment. Causeway Point is well connected to a regional bus interchange and the Woodlands MRT station which serves as the interchange station for the North-South Line and the Thomson-East Coast Line. The RTS station in Singapore will be connected to the Woodlands North Station on the Thomson-East Coast Line, which is one station away from Causeway Point. We anticipate higher shopper traffic through Causeway Point with the rise in residential and commuter traffic. This gives us the opportunity to enhance the retail and F&B offerings with the rise in shopper traffic and improved spending capacity.

In summary, we believe the upside opportunities from the upcoming developments and increase in working population and residential catchment in the North Region will outweigh the downside risk from the retail sales loss to Johor Bahru. We are confident that our two malls in the North - Causeway Point and Northpoint City – will remain resilient and continue to do well in the long run.

OUTLOOK

The Manager expects interest rate movements and the increase in operating expenses to remain the key factors that affect FCT's performance. Barring unforeseen circumstances, the Manager expects FCT's average cost of borrowings to remain around the low- 4.0% level for FY25. The Manager will continue to drive cost optimisation initiatives for its operations and adopt appropriate hedging strategies for energy contracts to mitigate the impact to its utilities expenses.

We remain optimistic about the outlook of the suburban retail sector in Singapore and believe that FCT is well-positioned to deliver stable growth and healthy performance in the future.

ACKNOWLEDGEMENTS

In closing, FY24 has been a year of significant progress and achievements for FCT.

We express our appreciation to all Unitholders for their unwavering support and trust in FCT. We also thank our board of directors, management team, and staff for their dedication and hard work. We are excited about the opportunities ahead and remain committed to delivering long-term value to our Unitholders.

Thank you for your continued support.

Koh Choon Fah
Chairman

Richard Ng
Chief Executive Officer

1. The five malls are Causeway Point, Waterway Point, Northpoint City, Century Square and Tampines 1
2. URA website, accessed 15 October 2024.
3. Housing & Development Board (HDB). 22 October 2024. "HDB Unveils Development Plans for Sembawang North and Woodlands North Coast".