09 April 2014

Frasers Centrepoint Trust

Frasers Centrepoint Trust (FCT) has entered into a conditional sale and purchase agreement to acquire Changi City Point mall for a purchase consideration of $305 million. It planned to finance the purchase with a combination of equity and debt financing. This will ensure that the acquisition is DPU‐accretive to FCT shareholders, while maintaining an optimum level of gearing. The proposed acquisition of Changi City Point will take the total number of suburban retail malls in FCT's portfolio to 6, it will also increase FCT's total assets by about 14% to $2.4 billion.

Changi City Point started operations in Nov 2011 and is 97.8% occupied as at end Feb 2014 and it has a remaining useful life of 55 years till Apr 2069. FCT is currently trading at 5.57% yield and 1x book which is about in line with sector peers.

With this acquisition of Changi City Point, the DPU will be increase, making it a sound investment portfolio for income investors to include FCT into their portfolio. Yield will be increased to approximately 6% for this sound and steady REIT.

No comments:

Post a Comment