Here’s why analysts expect Frasers Commercial Trust to weather the volatile office market

It’s enjoying a robust acquisition growth profile.

The commercial property firm has been banking on organic growth to weather the storm in the office market, and analysts say it just might work.

According to analysts from Barclays Research, since the takeover by FCL in 2008 and its portfolio restructuring, it is now a 60/40 Singapore/Australia office landlord, and its DPU has grown at a 12% CAGR over FY10-15.

“We still expect some organic growth in FY16 via: 1) fixed built-in step-up rent growth of 3.9% for 54% of its rental income; and 2) below-market passing rents for its Singapore properties,” Barclays said.

Meanwhile, Barclays said Frasers Commercial Trust is in a prime position to weather office headwinds, as its core properties in Singapore are targeted at Grade B business occupiers and would not compete head-on with the supply surge of Grade A office space.

“Only 7.7% of its GRI in Singapore’s CBD is expiring in 2016, reducing vacancy risks,” Barclays said.

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