Frasers Centrepoint Trust sells Changi City Point for $338 mil

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Frasers Centrepoint Trust (FCT) announced that it will be divesting Changi City Point for a consideration of $338 million in cash. The consideration was negotiated on a willing-buyer-willing-seller basis, taking into account the property’s independent valuation of $325 million as at July 31. Richard Ng, CEO of the manager, noted that the divestment is part of FCT’s strategic portfolio review to strengthen the REIT’s portfolio resilience and is in line with its long-term objective to create value for FCT’s unitholders.

The REIT’s trustee, HSBC Institutional Trust Services (Singapore), had entered into a sale and purchase agreement with an unrelated third party, brokered by Cushman & Wakefield, on Aug 30. The deal is expected to be completed on Nov 15.

Upon completion, FCT is estimated to net approximately $329.7 million in proceeds, after accounting for the divestment fee, divestment-related expenses and the transfer of tenants’ security deposits. The REIT manager intends to use the proceeds to repay its loans with higher interest rates and reduce its pro forma aggregate leverage as at June 30 from 40.2% to 37.1%.

This move will also reduce FCT’s average cost of borrowings for the nine-month period ended June 30 and improve its hedge ratio of fixed-rate loans from 63% to 73%, both on a pro forma basis. In addition, the divestment is estimated to deliver a net gain and capital gain of $10.9 million and $20 million respectively.

Changi City Point, located at 5 Changi Business Park Central 1, has three storeys and one basement level and is connected to the Expo MRT station on the East West and Downtown Lines. It has a net lettable area (NLA) of 19,366 sqm (208,453 sq ft).

The divestment is expected to lift FCT’s committed occupancy rate, average gross rent per square foot, tenants’ sales per square foot and the average remaining lease tenure of the retail portfolio. On completion, FCT’s retail portfolio will comprise nine retail properties located in the suburban regions of Singapore, with an aggregate net lettable area of approximately 2.7 million square feet. These properties are focused mainly on essential trades and services.