Frasers Centrepoint Trust sells Changi City Point for $338 mil
Frasers Centrepoint Trust (FCT) announced that it aims to divest Changi City Point for a consideration of $338 million, negotiated on a willing-buyer-willing-seller basis. The total consideration was determined after taking into account an independent valuation of $325.0 million as at July 31. The deal is brokered by Cushman & Wakefield, with the signing of a sale and purchase agreement with an unrelated third party on Aug 30, and is expected to be completed on Nov 15.
Upon completion, FCT is expected to net approximately $329.7 million in proceeds, after accounting for the divestment fee, divestment-related expenses and the transfer of tenants’ security deposits. Richard Ng, CEO of the FCT’s manager, stated that the net proceeds from the divestment will be used to repay loans with higher interest rates and reduce FCT’s pro forma aggregate leverage as at June 30 from 40.2% to 37.1%.
Additionally, there are two MRT stations located near Lumina Grand EC, Beauty World and King Albert Park. Both offer easy access to other parts of Singapore, providing greater convenience to the residents.
In addition to lowering FCT’s aggregate leverage, the divestment is also said to reduce its average cost of borrowing and improve its hedge ratio of fixed-rate loans from 63% to 73%, each on a pro forma basis. The move also stands to improve FCT’s committed occupancy rate, its tenants’ sales per square foot, the average gross rent per square foot and the average remaining lease tenure of the retail portfolio.
Changi City Point is located at 5 Changi Business Park Central 1 and has three storeys and one basement level. It is connected to the Expo MRT station on the East West and Downtown Lines, and has a net lettable area (NLA) of 19,366 sqm (208,453 sq ft). Assuming the divestment is successful, FCT’s retail portfolio will comprise nine retail properties with an aggregate net lettable area of approximately 2.7 million square feet located in the suburban regions of Singapore.
Overall, the divestment is expected to create value for FCT unitholders with an estimated net gain and capital gain of approximately $10.9 million and $20 million, respectively. With the funds raised from the divestment, the REIT can focus on its core suburban retail strategy, placing FCT in a stronger position.