The manager of Frasers Centrepoint Trust (FCT) has responded to shareholder concerns over the $108 million sale of Bedok Point mall, which was initially acquired at $129 million.
It noted that the mall's smaller size and the lack of direct connections to transport nodes limited its ability to be the dominant mall in Bedok Town Centre.
Despite proactive leasing and repositioning strategies to stabilise its performance, competition remained stiff due to larger and better new retail offerings, it added.
Various enhancement and redevelopment options were also evaluated, it added in remarks ahead of FCT's extraordinary general meeting yesterday.
Preliminary approval was obtained for its redevelopment into residential units with limited commercial on the first storey.
The sale price of $108 million on the basis of Bedok Point as a redevelopment site was supported by two independent valuations, which put the mall's net property income yield at 2.5 per cent.
The manager said that selling Bedok Point for redevelopment would be in the best interests of unit holders as the asset's value can be optimised and capital redeployed towards higher-yielding investments.
Separately, the manager is looking to undertake a private placement at an issue price of between $2.35 and $2.435 a unit and a non-renounceable preferential offering from $2.34 to $2.42 a unit.
The proposed equity fund raising will partially finance the real estate investment trust's acquisition of the remaining 63.11 per cent stake in AsiaRetail Fund from its sponsor, Frasers Property, and pare debt.
Taken together, the placement and offering will raise at least about $1.33 billion, and up to $1.44 billion, the manager said yesterday.
The private placement to institutional and other investors will involve 236.1 million to 244.7 million new FCT units to raise gross proceeds of around $575 million.
An upsize option to issue up to 42.6 million additional units will increase the placement's total gross proceeds to around $675 million.
The placement closes today with the units expected to list on Oct 7.
Between 313.4 million and 324.6 million new units will be offered to existing FCT unit holders in the preferential offering. This will bring in gross proceeds of at least $746 million.
THE BUSINESS TIMES