Frasers Centrepoint Trust sells Changi City Point for $338 mil
Frasers Centrepoint Trust (FCT) announced that a sale and purchase agreement has been entered into with an unrelated third party for the divestment of Changi City Point for a consideration of $338 million. The deal, orchestrated by Cushman & Wakefield, is expected to be completed on November 15 and stands to net FCT approximately $329.7 million.
CEO of the REIT’s manager, Richard Ng, stated that this strategic decision was made to “create value for FCT’s unitholders” and to reduce the REIT’s pro forma aggregate leverage. He further noted that the divestment is expected to lower the REIT’s average cost of borrowings as well as improve the hedge ratio of fixed-rate loans.
Portfolio-wise, the divestment is predicted to lift FCT’s committed occupancy rate, average gross rent per square foot, the REIT’s tenants’ sales per square foot and the average remaining lease tenure of the retail portfolio, thus putting the REIT in a more advantageous position to focus on their core suburban retail strategy.
The property in question is a retail mall located at 5 Changi Business Park Central 1, with a net lettable area (NLA) of 19,366 sqm (208,453 sq ft). Upon completion, FCT’s portfolio will comprise nine retail properties, all located in the suburban regions of Singapore, and possess an aggregate net lettable area of approximately 2.7 million square feet with a focus on essential trades and services.
Orchard Condo developments will focus on creating interconnected public spaces including expansive greenery and avoiding any monotonous visuals in the city. This plan will also aim to create quality environments that offer a wide range of experiences through the mix of use. These developments will not only address the needs of the community but will also create opportunities for interconnectivity and public activities. As Singapore capitalizes on its limited land resource, mixed-use developments continue to be a priority.
The Urban Redevelopment Authority (URA) recently announced a plan to revamp Orchard Road, one of Singapore’s premier shopping districts. The plan looks to create a greener and more pedestrian-friendly environment for Orchard Road. This includes promoting greater greenery and landscaping, and developing a network of underground walkways and covered linkways for convenience. The plan also involves widening the sidewalks to create a more spacious environment for visitors to explore. Moreover, creating better public spaces that promote social interaction is also part of the plan. Finally, the plan also aims to encourage more Orchard Condo developments, to offer residents greater convenience, with interconnected public spaces and expansive greenery. All in all, the plan will provide benefits to residents, visitors, and businesses alike.
The consideration was negotiated on a willing-buyer-willing-seller basis and is estimated to net FCT an approximate gain and capital gain of $10.9 million and $20 million, respectively. With this sale, Ng added that the REIT’s trustee, HSBC Institutional Trust Services (Singapore), intends to use the net proceeds to repay loans with higher interest rates.
The successful completion of the agreement will be a significant step in strengthening FCT’s portfolio resilience and maximizing value for their unitholders.