Frasers Property to buy 17.8% stake in PGIM Real Estate Retail Fund for about $355.5m

SINGAPORE - Frasers Property Limited has entered into a conditional sale and purchase agreement to acquire a 17.8 per cent stake in PGIM Real Estate Asia Retail Fund Limited (PGIM Real Estate) for some $356.4 million, subject to determination of the dividend amount payable in respect of the sale shares for the fourth quarter of 2018.

In a regulatory filing on Monday (Feb 18), Frasers Property said its subsidiary, Frasers Property Crystal, has entered into an agreement with a shareholder of PGIM Real Estate to purchase some 94,013 shares, representing a 17.8265 per cent stake in the company.

PGIM Real Estate is an open-end private investment vehicle set up as a company incorporated in Bermuda, and the largest non-listed retail mall fund in Singapore. It owns and manages six retail malls in Singapore - namely Tiong Bahru Plaza, White Sands, Liang Court, Hougang Mall, Century Square and Tampines 1, as well as office property, Central Plaza.

PGIM Real Estate is also the property investment business of PGIM, the global investment management arm of New York Stock Exchange-listed Prudential Financial Inc.

As at Dec 31, the book value and net asset value of the sale shares amount to $355.5 million, which includes the fourth quarter 2018 dividend.

Frasers Property intends to finance the acquisition via internal funds or external borrowings or a combination of both, it said.

Among other things, completion of the acquisition is conditional upon consent from the Bermuda Monetary Authority, and board approval from PGIM Real Estate.

Separately, it noted that the acquisition is in line with the group's strategy to grow recurring income sources in one of its key asset classes, as PGIM Real Estate's assets consist primarily of suburban retail properties.

It added that the deal will enhance the group's portfolio of investment properties, as suburban retail is an asset class that has demonstrated "resilience across property cycles".

As at Feb 15, Frasers Property has a market cap of S$4.96 billion. The counter was trading at S$1.71 apiece as at 9.17am on Monday, up 0.59 per cent or one cent.