Frasers Centrepoint Asset Management Ltd. (FCAM), the manager of Frasers Centrepoint Trust (FCT), has announced the sale of Changi City Point (the "Property") to an unrelated third party for a cash consideration of S$338.0 million. The completion of this divestment is expected to occur on November 15, 2023.
Changi City Point is a retail mall situated at 5 Changi Business Park Central 1, Singapore 486038. This mall holds significance due to its connection to the Expo Mass Rapid Transit (MRT) station, which serves as both an interchange station on the Downtown line and a branch line connecting to Changi Airport on the East West line.
The configuration of the Property comprises three above-ground storeys and an additional basement level. Its net lettable area (NLA), which indicates the leasable space, is approximately 19,366 square meters (or 208,453 square feet).
As of September 30, 2022, the Property hosted a total of 128 tenants. Notably, some key tenants include FairPrice Finest and Daiso. In terms of tenant distribution, the largest trade sectors within the mall are Food & Beverage, Fashion & Accessories, and Sports Apparel & Equipment. These sectors collectively account for around 70% of the Property's NLA.
Over the period spanning from October 1, 2021, to September 30, 2022, the mall received a total shopper traffic of 7.5 million, underscoring its significance and popularity among consumers.
Changi City Point has a title of 60-year leasehold starting from 30 April 2009.
Mr. Richard Ng, the Chief Executive Officer of FCAM, stated that this divestment is part of their strategic portfolio review to enhance the resilience of FCT's portfolio and create value for FCT's unitholders. The estimated net gain from the divestment is approximately S$10.9 million, with a capital gain of approximately S$20 million.
This divestment is also expected to strengthen FCT's financial position by reducing its aggregate leverage, lowering the average cost of borrowings for the nine-month period ending on June 30, 2023, and improving the hedge ratio of fixed-rate loans from 63% to 73%, all on a pro forma basis. Following the divestment, FCT anticipates improvements in various portfolio performance metrics, including committed occupancy rate, average gross rent per square foot, tenants' sales per square foot, and the average remaining lease tenure of the retail portfolio. These enhancements will enable FCT to focus on its core suburban retail strategy moving forward.
The Consideration for the divestment of Changi City Point was negotiated based on a willing-buyer-willing-seller approach, taking into account the independent valuation of the Property, which was S$325.0 million as of July 31, 2023. The estimated net proceeds from the divestment, after accounting for divestment fees, related expenses, and the transfer of tenants' security deposits, is approximately S$329.7 million. The net proceeds will be used to repay loans with higher interest rates and reduce FCT's pro forma aggregate leverage from 40.2% to 37.1%.
JTC Corporation ("JTC") has provided official written approval for the Divestment, in line with the terms outlined in JTC's preliminary written approval for the Divestment. Both the Trustee and the Purchaser are obligated to adhere to the terms and conditions stipulated by JTC and any relevant competent authorities. This compliance is required as a condition for the grant of the JTC Consent Letter. Both parties must also acknowledge and accept the JTC Consent Letter, following the guidelines specified within the document. This confirms that all parties involved are aligned with the regulatory and procedural requirements set forth by JTC in relation to the Divestment.
After the completion of this divestment, FCT's retail portfolio will consist of nine retail properties, all located in suburban regions of Singapore. The total net lettable area of FCT's retail property portfolio will be approximately 2.7 million square feet, with a strong emphasis on essential trades and services. The nine retail properties in FCT's portfolio include Causeway Point, Northpoint City North Wing (including Yishun 10 Retail Podium), NEX (FCT holds an effective 25.5% interest), Waterway Point (FCT holds a 50.0% interest), Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square, and Tampines 1.
Frasers Property Limited (“Frasers Property” and together with its subsidiaries, the “Frasers Property Group” or the “Group”), is a multinational investor-developer-manager of real estate products and services across the property value chain. The company is listed on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST) and has its headquarters in Singapore. As of March 31, 2023, the Group possesses total assets valued at approximately S$40.1 billion.
The operations of Frasers Property Group are diverse, encompassing five main asset categories: residential properties, retail properties, commercial and business parks, industrial and logistics facilities, as well as hospitality properties. The Group's reach extends across several regions, including Southeast Asia, Australia, Europe, and China. Notably, their well-established hospitality arm owns and/or manages serviced apartments and hotels situated in more than 20 countries and spanning over 70 cities across Asia, Australia, Europe, the Middle East, and Africa.
Frasers Property is also the sponsor of two real estate investment trusts (“REITs”) and one stapled trust listed on the SGX-ST. Frasers Centrepoint Trust and Frasers Logistics & Commercial Trust are focused on retail, and industrial & commercial properties, respectively.