Frasers Centrepoint Trust (FCT) has divested 10 strata lots in a strata-titled retail development at 51 Yishun Central 1 (also known as Yishun 10) to Frasers Property Limited for $34.5 million.
Frasers Property, through its wholly-owned subsidiary, Lion (Singapore), entered into a sale and purchase agreement (SPA) with FCT’s trustee, HSBC Institutional Trust Services (Singapore) Limited, on Aug 25.
The properties, located next to Northpoint City, are held under subsidiary strata certificates of title. The lots have a leasehold term of 99 years commencing from April 1, 1990. They were acquired in 2016 and have a total gross floor area of 966 sqm and total net lettable area (NLA) of 961 sqm.
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’ valuation of $35 million.
According to FCT, the divestment is in line with the manager’s proactive portfolio management strategy to optimise portfolio composition and its returns. The manager says it intends to use the net proceeds of $33.8 million to repay “certain debt”, which will reduce FCT’s aggregate leverage. The net sum accounts for other divestment related expenses of approximately $0.2 million and transfer of tenants’ security deposits of approximately $0.5 million.
Given 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 profits 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 manual.
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That said, the divestment is deemed to be an interested person transaction and interested party transaction given that Frasers Property is the REIT’s sponsor. Frasers Property, through Frasers Property Retail Trust Holdings Pte. Ltd. and FCT’s manager, owns a 37.94% stake in FCT. FCT’s manager is also a wholly-owned subsidiary of Frasers Property Limited, in which the latter is regarded as a “controlling shareholder” of the manager.
The divestment is not subject to FCT’s unitholders’ approval as it makes up 1.17% of the net tangible assets (NTA) and NAV of FCT as at Sept 30, 2024, and less than the requisite 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.
According to Frasers Property, the transaction was made to “optimise capital productivity through active portfolio management initiatives”. “The proposed transaction will potentially enable the group to generate additional value from the longer-term redevelopment potential of the asset,” it adds.
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Frasers Property already owns the only other property at Yishun 10, which is the 1,477-seat Golden Village cineplex in Yishun. The company acquired it from Golden Village Multiplex Pte Ltd on Aug 8 for $48 million.
Upon the completion of the latest proposed transaction, Frasers Property will assume full ownership of Yishun 10 and operations at Yishun 10 will continue as usual.
Shares in Frasers Property closed 5 cents higher or 5.26% up at $1 while units in FCT closed 4 cents higher or 1.78% up at $2.29 on Aug 25.
