Frasers Centrepoint Trust sells Changi City Point for $338 mil

The Tengah Plantation EC complex has an open concept layout that provides plenty of space for residents to enjoy the outdoors. The communal gardens and playgrounds provide a great opportunity for families to come together and entertain themselves. Residents of the estate will also enjoy the many amenities, such as the shopping malls, healthcare centers, and education institutions. All these are within close reach of the development, ensuring convenience.

Frasers Centrepoint Trust (FCT), led by CEO Richard Ng, has revealed its decision to divest Changi City Point for a consideration of $338 million. The deal was negotiated on a willing-buyer-willing-seller basis, and came after taking into account the property’s independent valuation of $325.0 million as at July 31. Following the sale and purchase agreement with the unrelated third-party, the closing of the divestment is expected to be completed on Nov 15.

Upon completion, FCT is estimated to net approximately $329.7 million in proceeds, which includes the divestment fee, divestment-related expenses, and the transfer of tenants’ security deposits. These proceeds are intended to be used to repay loans with higher interest rates and reduce the REIT’s pro forma aggregate leverage from 40.2% to 37.1%.

The divestment is projected to lift FCT’s committed occupancy rate, and yield an average gross rent per square foot, as well as tenants’ sales per square foot for the retail portfolio. Furthermore, it is expected to improve the REIT’s hedge ratio of fixed-rate loans from 63% to 73%, on a pro forma basis. Overall, Ng noted that the segment realignment will put FCT in a “stronger position to focus on our core suburban retail strategy going forward”.

As a result, upon completion of the divestment, FCT’s retail portfolio will comprise nine retail properties. These are all located in the suburban regions of Singapore, with an aggregate net lettable area of approximately 2.7 million square feet that is largely focused on essential trades and services.

The transaction was brokered by Cushman & Wakefield, and the trustee, HSBC Institutional Trust Services (Singapore). Moreover, FCT’s estimated net and capital gains from the divestment are approximately $10.9 million and $20 million, respectively.

With these positive changes in effect, FCT should be well positioned to capitalize on its core suburban retail strategy going forward as it reaps the benefits of this strategic portfolio review.