Frasers Centrepoint Trust (FCT) is proposing to raise up to $1.39 billion in equity to fund its acquisition of the remaining 63.1 per cent of AsiaRetail Fund for $1.06 billion.
AsiaRetail Fund owns five malls in Singapore - Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square and Tampines 1 - as well as one office property, Central Plaza.
If the acquisition goes through, FCT's retail properties in its portfolio will increase from seven to 11, and its net lettable area will expand by about 64 per cent to 2.3 million sq ft. This places FCT among the largest suburban retail mall owners in Singapore.
FCT's portfolio size will increase to approximately $6.65 billion, from $3.96 billion.
It currently has seven suburban retail properties in Singapore, namely Causeway Point, Northpoint City North Wing (including Yishun 10 Retail Podium), Anchorpoint, YewTee Point, Bedok Point, Changi City Point and Waterway Point (40 per cent interest).
To fund the acquisition and pare down existing debt, FCT's manager is proposing to issue up to 628 million new units in the trust, representing around 56.1 per cent of the total number of issued units.
Based on the illustrative issue price of $2.22 per new unit, the proposed equity fund raising is expected to raise gross proceeds of up to $1.39 billion.
AsiaRetail Fund also owns Setapak Central, a mall in Kuala Lumpur, which it proposes to divest to FCT's sponsor for a sale price of $39.7 million.
FCT also plans to divest Bedok Point to its sponsor for a sale price of $108 million.
On a pro forma basis, these transactions are expected to provide 8.59 per cent distribution per unit accretion based on FCT's FY2019 financial statements.
Suburban malls remain an attractive asset class, FCT said, noting that more than 99 per cent of the retailers in the AsiaRetail Fund's Singapore retail assets and FCT's existing portfolio have resumed business since phase 2 of Singapore's reopening on June 19.
"The pace of the recovery has demonstrated the resilience of suburban retail malls through challenging times," it added.
The acquisition fee payable to the real estate investment trust manager for the proposed acquisition is approximately $19.3 million.
Stamp duties, professional fees and other expenses to be incurred in connection with the acquisition and the proposed equity fund raising are estimated at $32.1 million.
FCT will convene an extraordinary general meeting on Sept 28 to seek unit holders' approval for the proposed transactions.
THE BUSINESS TIMES