FCT divests 10 strata lots at Yishun 10 to Frasers Property for $34.5 mil
The divestment is exempt to FCT’s unitholders’ approval as it composes 1.17% of the net tangible assets (NTA) and NAV of FCT as at Sept 30, 2024, and short of the essential 5% of FCT’s latest audited NTA and NAV under Rule 906( 1) of the listing manual and paragraph 5.2 (b) of the property funds appendix.
Frasers Property, via its wholly-owned subsidiary, Lion (Singapore), entered into a sale and purchase arrangement (SPA) with FCT’s trustee, HSBC Institutional Trust Services (Singapore) Limited, on Aug 25.
The sale consideration factored in the latest valuations of the properties as at May 31. The properties were valued by Jones Lang LaSalle Property Consultants Pte Ltd (JLL) and Savills Valuation and Professional Services (S) Pte Ltd. The agreed property value is the average of JLL’s valuation of $34 million and Savills’ assessment of $35 million.
The properties, positioned beside Northpoint City, are held under subsidiary strata certificates of title. The lots have a leasehold term of 99 years beginning from April 1, 1990. They were acquired in 2016 and have a complete gross flooring area of 966 sqm and complete net lettable area (NLA) of 961 sqm.
Upon the completion of the current suggested transaction, Frasers Property will conclude full ownership of Yishun 10 and proceedings at Yishun 10 will proceed as usual.
Frasers Property currently owns the only various other property at Yishun 10, which is the 1,477-seat Golden Village cineplex in Yishun. The company obtained it from Golden Town Multiplex Pte Ltd on Aug 8 for $48 million.
According to Frasers Property, the deal was made to “optimize capital performance with active account management initiatives”. “The proposed deal will potentially enable the group to generate additional value from the longer-term redevelopment possibility of the asset,” it adds.
That said, the divestment is considered to be an interested person transaction and interested party transaction considered that Frasers Property is the REIT’s sponsor. Frasers Property, through Frasers Property Retail Trust Holdings Pte. Ltd. and FCT’s supervisor, owns a 37.94% claim in FCT. FCT’s manager is even a wholly-owned subsidiary of Frasers Property Limited, wherein the latter is considered a “controlling shareholder” of the supervisor.
Considered that the net asset value (NAV) of the properties of $33.5 million is 0.8% to FCT’s NAV of $4.15 billion and the net earnings attributable to the properties of $0.2 million is 0.2% of FCT’s net profit of $97 million, the divestment is classified as a “non-discloseable transaction” under Rule 1008 of the listing guidebook.
Frasers Centrepoint Trust (FCT) has unloaded 10 strata lots in a strata-titled retail property development at 51 Yishun Central 1 (additionally called Yishun 10) to Frasers Property Limited for $34.5 million.
According to FCT, the divestment remains in line with the supervisor’s proactive portfolio management strategy to optimize account structure and its yields. The manager says it intends to use the net proceeds of $33.8 million to settle “certain financial obligation”, that will certainly decrease FCT’s aggregate leverage. The net total accounts for many others divestment related expenditures of about $0.2 million and transfer of renters’ security deposits of roughly $0.5 million.
