Frasers Centrepoint acquires 4 business parks in UK for $1.2b, expanding into new segment

(Clockwise from top left) Winnersh Triangle, Chineham Park, Watchmoor Park and Hillington Park.
(Clockwise from top left) Winnersh Triangle, Chineham Park, Watchmoor Park and Hillington Park.PHOTO: FRASERS CENTREPOINT

SINGAPORE - - Frasers Centrepoint Ltd (FCL) has acquired four business parks in Britain for approximately £686 million (S$1.2 billion), marking its debut into a new market segment, it announced in a pre-market filing on Monday (Sept 11).

Its wholly-owned subsidiary, Frasers Property International Pte Ltd entered into sale and purchase agreements with the relevant vendors, each of which are subsidiaries of a fund or account managed by Oaktree Capital Management, LP, to acquire the four freehold properties, which have a total built area of 4.9 million square feet.

Frasers Property has also entered into a conditional agreement to acquire another business park, Maxis, Bracknell, subject to conditions relating to net operating yield and Maxis achieving an occupancy of at least 95 per cent.

The four business parks acquired are in Winnersh Triangle in Reading, Chineham Park in Basingstoke, Watchmoor Park in Camberley, and Hillington Park in Glasgow.

FCL said the acquisition will be fully funded through a mix of debt and its internal resources. It expects the purchase will complete within 60 days from the date of signing of the sale and purchase agreements, whilst the completion of the Maxis acquisition will take place no later than 20 working days after June 29, 2018.

Said FCL group chief executive officer, Panote Sirivadhanabhakdi, said the acquisition was in line with the group's strategy to grow overseas presence and recurring income sources.

"The group has been in the UK and Europe for over 15 years, and we now extend our presence from the residential, hospitality, industrial and logistics sectors to include the commercial and business park sector," he said. "We can also potentially benefit from the "network effect", given that we are already in the industrial, logistics, commercial and business park sectors in Australia, Germany, the Netherlands, Singapore and Thailand."

Post-acquisition, on a pro forma basis, the group will have around S$4.2 billion of assets in the UK and Europe, and commercial properties as a proportion of FCL's S$26.8 billion of total assets will increase to around 30 per cent.

Added Mr Sirivadhanabhakdi: "The properties are highly defensive with growth prospects. From a tenancy perspective, the rental income from the properties are underpinned by long term leases to a diversified base of over 400 tenants.

The properties have a weighted average lease to expiry of 5.9 years and tenants include large companies such as BMC Software, Ericsson, Harris Systems, Intel, Level 3 Communications and Novartis.

"In addition, with over 1.4 million sq ft of development built area, there is opportunity to increase built area by almost 30 per cent in the future," he said.