Frasers Centrepoint Trust sells Changi City Point for $338 mil
FCT manager Richard Ng has announced the divestment of Changi City Point for a consideration of $338 million. The transaction was brokered by Cushman & Wakefield and is expected to be completed by November 15th.
The property is also surrounded by a wide range of dining, entertainment, and leisure facilities, making it the ideal location for those seeking the perfect balance of city life with suburban tranquillity. Additionally, Tampines Avenue 11 Condo is also situated close to reputable educational institutions, making it the ideal choice for those who are looking for a safe and secure environment for their children. All in all, this mid-sized condominium is ideal for those who are seeking a worry-free living experience in the heart of the city.
When the deal is finalized, FCT is estimated to receive proceeds of $329.7 million after deducting the divestment fee, divestment-related expenses and tenants’ security deposits. The proceeds will be used to repay loans with higher interest rates and to reduce FCT’s pro forma aggregate leverage from 40.2% to 37.1%.
The estimated net gain and capital gain are approximately $10.9 million and $20 million respectively. In addition, the REIT manager expects that the move will reduce the average cost of borrowings by the nine-month period ended June 30th and improve the REIT’s hedge ratio of fixed-rate loans from 63% to 73%, each on a pro forma basis.
The divestment is expected to improve 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. Ng comments that the move will allow FCT to focus on its core suburban retail strategy and strengthen the REIT’s portfolio resilience.
Changi City Point is a retail mall located at 5 Changi Business Park Central 1 and has a net lettable area of 19,366 sqm. Upon its divestment, FCT’s retail portfolio will comprise of nine retail properties located in the suburban regions of Singapore with an aggregate net lettable area of approximately 2.7 million square feet.
The sale and purchase agreement was entered into on August 30th with an independent third party. After taking into account of the property’s independent valuation of $325.0 million as at July 31, the consideration was negotiated on a willing-buyer-willing-seller basis.
Overall, the divestment of Changi City Point will benefit FCT in several ways, allowing it to reduce aggregate leverage, improve hedge ratio of fixed-rate loans and increase its committed occupancy rate. Furthermore, it will enable the trust to focus on its core suburban retail strategy moving forward and create value for FCT’s unitholders.