SINGAPORE - Frasers Centrepoint Trust (FCT) is looking to acquire a one third interest in Waterway Point, a large suburban mall located in Punggol, from its sponser Frasers Property in a $440.6 million deal, it announced on Thursday (May 16).
At the same time, FCT is launching an equity fund raising exercise, $245.3 million of whose total proceeds will go towards partly financing the acquisition.
The acquisition of the stake in Waterway Point will be done via a sale and purchase agreement with Frasers Property's wholly-owned unit FCL Emerald (2) Pte Ltd, which currently holds one third of the total issued units of Sapphire Star Trust (SST), an equal three-way joint venture between the vendor, Far East Civil Engineering and Sekisui House to develop the property.
FCT's total outlay for the acquisition is estimated at $440.6 million. This comprises $240.8 million for FCL Emerald's total issued units in SST; $191 million for a one-third share of a unitholder's loan previously extended to SST; $8,700 for one-third of the issued share capital of FC Retail Trustee, the trustee-manager of SST; and $8.8 million in acquisition-related fees and expenses.
The purchase price was based on an agreed value of Waterway Point at $1.3 billion or $3,502 per square foot (psf) of net lettable area (NLA), on a 100 per cent basis. One third of that amount is $433.3 million, FCT said on Thursday in a regulatory filing.
The value of the property was based on two independent valuations by JLL and CRBE, which each valued the property at $1.31 billion and $1.30 billion respectively in their reports dated April 1.
The four-storey mall has a NLA of 371,200 sq ft and committed occupancy of 98.1 per cent as at March 31. Its weighted average lease expiry by gross rental income is at 1.80, and 1.89 by NLA. The net property income yield based on the agreed property value is estimated to be 4.7 per cent, FCT added.
Chew Tuan Chiong, chief executive FCT's manager said unitholders can expect the acquisition to be "DPU-accretive". He added that Waterway Point is an excellent fit with FCT's existing portfolio of suburban retail malls and the acquisition will strengthen FCT's earnings resilience through greater income diversification and an enlarged tenant base.
FCT's equity fundraising exercise meanwhile looks to raise around $421.7 million in gross proceeds.
This will consist of a private placement of 135.7 million new units at price range of $2.30 to $2.382 apiece to raise at least $312.0 million. This is also subject to an upsize option to raise additional funds until aggregate proceeds are around $369.9 million.
The private placement issue price range represents a discount between 2.3 per cent and 5.7 per cent of the volume weighted average price (VWAP) of $2.4378 per unit on Wednesday, up to the time the underwriting agreement was signed on Thursday.
Another part of the exercise involves a pro-rata and non-renounceable preferential offering of up to 48.3 million new units at an issue price of between $2.270 and $2.352 to raise at least $65.4 million. This represent a discount of between 3.5 per cent and 6.9 per cent to the VWAP of $2.4378 per unit.
Out of the gross proceeds, 58.2 per cent or $245.3 million will go towards partly financing the Waterway Point acquisition, while 41.8 per cent or $176.4 million will go towards paring down bridging loans taken by FCT in connection with its indirect acquisition of a stake in PGIM Real Estate Asia Retail Fund announced in February and March.
Trading in FCT shares were halted before market open on Thursday. They closed at $2.45 on Wednesday, up two cents, or 0.8 per cent.