FCT – BT

FCT buying Bedok Point for $127m

FRASERS Centrepoint Trust (FCT) is buying Bedok Point for $127 million from its sponsor, Frasers Centrepoint Limited – the property arm of Fraser and Neave (F&N) – using a mixture of debt and equity.

The market has been expecting the acquisition, so the spotlight is now on the number of new units FCT could issue and the potential issue price.

FCT said yesterday that it is likely to conduct a private placement, but it gave no other details on the exercise. It will inform unitholders of the details of the financing structure ‘in due course’.

Bedok Point is a four-storey mall at Bedok town centre, with a net lettable area of 80,985 square feet. It commenced operations in December 2010 and was 97.4 per cent occupied as at June 30. It will be the fifth mall in FCT’s Singapore portfolio and will boost the retail real estate investment trust’s (Reit) asset size to $1.66 billion from $1.53 billion.

The price of $127 million is the average of two valuations – $128 million and $126 million – by independent valuers.

‘Our unitholders can expect to enjoy higher distribution per unit from this yield-accretive acquisition,’ said CEO of FCT’s manager Chew Tuan Chiong in a press release.

FCT is in the process of determining an optimal debt and equity-financing plan for the purchase, said Dr Chew at a separate briefing. Through the issuance of new units, the Reit can also increase its free float, he added. As at July 28, F&N held a 43.2 per cent interest in FCT and is its single largest unitholder.

Dr Chew was unable to comment on the amount of discount the new units could be priced with, but he pointed to FCT’s earlier private placement for the purchase of YewTee Point and Northpoint 2. When the exercise took place amid a ‘very volatile’ market in early 2010, the new units were priced at a 3.7 per cent discount to FCT’s adjusted volume-weighted average unit price.

Moody’s Investors Service said that the acquisition has no immediate impact on its Baa1 corporate family rating on FCT, and the rating outlook is stable.

DMG & Partners Research raised its target price for FCT to $1.79 from $1.77 and maintained its ‘buy’ call on the counter.

FCT gained half a cent on the stock market yesterday to close at $1.54. Meanwhile, F&N rose five cents to close at $6.

The conglomerate will be re-investing net proceeds from the sale of Bedok Point.