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Frasers Centrepoint Trust to divest YewTee Point for S$220m
FRASERS Centrepoint Trust will divest YewTee Point for S$220 million, having entered into a sale-and-purchase agreement with an unrelated third party.
Its manager, Frasers Centrepoint Asset Management (FCAM), said in a regulatory filing on Friday night that the transaction is expected to be completed on May 28.
FCAM intends to use the sales proceeds to repay debts and lower the trust' s gearing level.
The Choa Chu Kang mall was valued at S$200 million by Savills Valuation and Professional Services as at Jan 31.
FCAM stated that the divestment is in line with its proactive portfolio management strategy to optimise the trust' s portfolio composition and the returns objectives for its unitholders. Upon completion of the divestment, FCT' s retail portfolio will comprise nine retail properties, all located in the suburbs of Singapore.
Metro' s possible department store exit may impact SPH Reit, FCT, says DBS
BETWEEN SPH Reit and Frasers Centrepoint Trust (FCT), the former is likely to see a greater possible impact from Metro Holdings' potential exit of its department store business, DBS Group Research said on Tuesday.
Metro has two department stores with a few years left on the lease at SPH Reit' s Paragon and FCT' s Causeway Point, where it stands as an anchor tenant.
DBS said the exposure appears to be material for Paragon, a key asset for SPH Reit. Metro' s department store occupies a " cold corner" within the mall where there is less traffic. Hence having an anchor tenant to continue operating at the space is necessary to " pull" traffic.
For FCT, the research team sees income risk being further minimised with the contribution from the PGIM portfolio. It also believes it will be easy to find a new anchor tenant should Metro exit as the department store occupies a relatively desirable part of the mall - levels one to three with good frontage.
On the sector as a whole, DBS noted there are still a handful of department store tenants battling the same pandemic pressure, with a good number owned by S-Reit (Singapore-listed real estate investment trust) landlords or Reit sponsors.
The retail format has been struggling for years, having failed to establish a meaningful omnichannel preference. Moreover, the lack of ability to hold atrium sales has put further pressure on the revenues of these department stores, the research team said.
DBS has a " hold" call on SPH Reit with a target price of S$0.80 and a " buy" call on FCT with a target price of S$3.
FCT to divest Anchorpoint shopping centre for S$110m
Anchorpoint pdf.jpg Anchorpoint comprises two retail levels (including one basement level) and an adjacent two-storey building. PHOTO: GOOGLE MAPS
FRASERS Centrepoint Trust (FCT) will divest Anchorpoint shopping centre for S$110 million to unrelated third parties, the manager said on Wednesday in a bourse filing.
FCT' s trustee entered into two sale and purchase agreements with each of the undisclosed purchasers for the proposed sale of two strata lots (together with the accessory lots) to each buyer. These lots collectively comprise the shopping centre.
Anchorpoint is a mall with a net lettable area of approximately 6,616 square metres. It comprises two retail levels (including one basement level) and an adjacent two-storey building.
The shopping centre has 51 tenants as at Sept 30, 2020. Key tenants include household retailer Mr D.I.Y., fashion retailer Cotton On, Koufu food court, Xin Wang HK Café , as well as restaurants Sakuraya, Uncle Leong Signatures and Jack' s Place.
The sale consideration took into account Anchorpoint' s independent appraised value of S$110 million as at Sept 15, 2020. The manager expects net proceeds of S$108.8 million, after taking into account divestment-related expenses. These net proceeds may be used to repay debt or for working capital purposes, it said.
The proposed transaction is expected to complete by March 22, 2021.
Post divestment, FCT' s Singapore retail portfolio will consist of 10 malls with about 2.3 million square feet of net lettable area and more than 1,500 leases with a strong focus on essential trades and services, the manager said.
Reach high and profit taking now, could this be a short target for now?
FCT is dropping towards its Preference share offering price again. The malls they manage are very crowded, good to nibble a bit before Phrase 3.
Frasers Centrepoint Trust is still keen on acquisitions
It feels confident about outlook for its focused suburban mall strategy, as these malls are likely to benefit from remote working trend.
FRASERS Centrepoint Trust (FCT) may have just announced a sizeable deal, but the manager of the real estate investment trust (Reit) has no qualms about snapping up more properties if the right opportunities come along.
" When the opportunity (to acquire suburban retail space) is available to us, we will evaluate it," said Richard Ng, chief executive at Frasers Centrepoint Asset Management. " If it is yield accretive and something that adds to the benefit of our unitholders, we will definitely look at it."
FCT recently bought the remaining 63.1 per cent of AsiaRetail Fund (ARF) it does not own for S$1.06 billion. The acquisition gives FCT 11 suburban retail properties, up from seven previously.
Mr Ng said the manager' s immediate focus is to " improve the operations, making sure that we manage the operating and financial performance of this enlarged portfolio well" .
But he added that FCT still has the capacity to make further acquisitions - even with gearing set to rise to 39.3 per cent following the ARF transaction, a S$1.34 billion fundraising exercise to fund it, and a separate sale of Bedok Point.
" Let' s say we find an attractive opportunity and it' s an accretion to our portfolio. We can always come back to the market, to our unitholders, to support the transaction," he said.
In addition, he noted the gearing limit for Reits today is 50 per cent. " If there is a very, very good opportunity tomorrow, and the owner comes and says: ' It' s either you do it in the next six months or I' m not going to sell' , this is where we have to evaluate and, if necessary, increase (gearing) slightly. Then over time, with the valuation increasing and so on, gearing could come down again."
Acquisition strategy
Among the assets that could become available to FCT is Northpoint City South Wing, which is partially owned by FCT' s sponsor Frasers Property. That asset was last valued at over S$1 billion.
FCT also sees the potential to buy properties from owners of individual malls or from those with a small portfolio of assets, as such owners may be finding it harder to survive in a fast- evolving retail landscape.
Mr Ng said the growing popularity of omni-channel retail requires landlords to invest in such platforms. But small owners will find it costly and difficult to develop such infrastructure without the advantages of scale.
" We do believe that some of these mall owners may decide that it' s better for them to exit the market, cash out and deploy the capital into something that they could manage better," he said.
At the same time, FCT " would not hesitate" to divest underperforming assets when possible.
" For certain assets, if we think that is the maximum we could derive from them, (we may divest them)," Mr Ng said.
For instance, FCT recently sold Bedok Point because the mall' s small size - it is about 80,000 square feet (sq ft) - and lack of direct connectivity to key transportation nodes limited its ability to be the dominant mall within Bedok Town Centre.
The mall' s performance was also affected when new and strong competition emerged in the vicinity, despite the manager' s leasing efforts and repositioning strategies.
Mr Ng said that FCT still has " one or two (of such) smaller assets" . Among them is Anchorpoint, which is just over 70,000 sq ft and generated S$3 million in net property income for the financial year ended Sept 30. Bedok Point had generated S$2 million.
FCT will continue to " drive the performance" of such smaller assets while considering opportunities if these arise, he said.
Retail pain
Although the retail sector is suffering from lower demand and an accelerated shift to online shopping due to the Covid-19 pandemic, FCT feels confident about its focus on suburban malls.
These tend to provide essential goods and services to nearby residential estates. And with remote working becoming more common, suburban malls are expected to be winners.
FCT also believes its suburban malls are perfectly positioned to serve as " last-mile" delivery and order collection points.
The short term outlook, however, is less sanguine. Following the release of FCT' s FY20 results on Nov 3, a Maybank Kim Eng report said management expects its lease negotiations to be " more protracted" and rental reversions to be " neutral or slightly negative" in FY21.
CGS-CIMB, meanwhile, pointed out that leases representing 32.6 per cent of FCT' s gross rental income were up for renewal in FY21, and that 20 per cent of those leases have been renewed at an average of negative to neutral rental reversion.
Mr Ng said retailers are still facing " quite a bit of uncertainty" , as the recovery of the sector has been uneven. Some tenants may still be struggling to regain profitability due to safe management measures in malls.
FCT is therefore adopting differentiated approaches in negotiating with tenants. An example is locking in leases where the rent is lower for an initial period, perhaps six months, before reverting to the market rate in a subsequent period.
" The idea here is to allow us some time so that we have more clarity and visibility on the market and the way it' s going to be reopened. Tenants will also be able to assess when things get better, what kind of sales they can do, whether the business is sustainable or otherwise, and then we can come back to the table to look at a more permanent lease structure," said Mr Ng.
FCT is also carefully assessing tenants' sales numbers, taking into account both pre- and post-pandemic performance. " If certain trades or tenants (were) already not doing well, typically we will engage them and work with them on improving their sales.
" In some instances, if we find that either their product or their operations is not suitable for the market or area, then perhaps it might be better for them to exit and we replace them with better tenants. It works better for us, and for them."
Financial impact
Rental rebates provided to tenants amid the pandemic have affected FCT' s performance. Gross revenue for the half year ended Sept 30 fell 33.8 per cent on the year to S$64.5 million, mainly due to S$27.4 million in rental rebates.
Meanwhile, income available for distribution fell 51.6 per cent year-on-year to S$30.1 million. FCT' s distribution per unit (DPU) fell 26.1 per cent to 4.372 Singapore cents for the half year, from 5.913 cents a year ago.
Mr Ng said FCT has now reduced rental help to only those still unable to resume business, such as karaoke lounges and travel agencies. These tenants lease less than 1 per cent of FCT' s total space, he said.
For other tenants, help is rendered case by case and may be in other forms such as online marketing and mall promotions.
FCT may have to extend further concessions to its tenants. The government is introducing a framework named Re-Align to help small and micro businesses renegotiate or exit contracts without penalties.
Mr Ng thinks that such businesses will make up only " a very small proportion" of FCT' s tenants, although he noted that specifics of the framework have not yet been announced.
DBS raises target price on FCT, says retail sales rebound may be sustainable
DBS Group Research has raised its target price on Frasers Centrepoint Trust (FCT) to S$3 from S$2.94 previously.
FCT units were trading at S$2.23 as at 1.06pm on Wednesday, up S$0.12 or 5.7 per cent.
In maintaining their " buy" call for the real estate investment trust (Reit), DBS analysts Geraldine Wong and Derek Tan noted that the retail sales rebound seen by FCT' s tenants may be sustainable.
" Retail sales in Q4 FY20 narrowed to about 3 per cent below normalised levels and we believe the momentum can be sustained, given that majority of the trades are essential services," Ms Wong and Mr Tan wrote in a research note on Wednesday.
The analysts also expect the Phase Three reopening of the Singapore economy to boost FCT' s portfolio performance. In particular, they anticipate the resumption of atrium sales and potentially larger group sizes (from five to eight people) to drive consumption, especially for the food & beverage sector.
Additionally, DBS is of the view that the PGIM Real Estate Asia Retail Fund acquisition will drive the Reit' s performance in FY2021.
" With one of the largest exposures in the suburban retail portfolio in Singapore, we remain excited that FCT can deliver a potent mix of growth and stability in the medium term," Ms Wong and Mr Tan said.
With the completion of the acquisition of PGIM portfolio and the planned sale of Bedok Point, DBS is projecting about a 6 per cent increase in FCT' s distribution per unit (DPU) for FY2021, versus its pre-Covid-19 DPU of 12.1 Singapore cents.
The analysts are of the view that the " worst is potentially over" for FCT, and that the Reit has entered a " new era of growth" , with the potential for more deals in the pipeline.
" We believe that PGIM is not the end game for FCT and there are further acquisitions that can be executed in the medium term, including Northpoint City South Wing and further stakes in Waterway Point," DBS noted.
Earlier this week on Tuesday, FCT posted a DPU of 4.372 Singapore cents for the half year ended Sept 30, down 26.1 per cent from 5.913 cents a year ago. Gross revenue tumbled 33.8 per cent to S$64.5 million, mainly due to S$27.4 million in rental rebates provided to tenants amid the pandemic, its manager said.
No debt involved in this acqusition man! The money all come from equity raising, preferential offering and divestments.
FCT divested their holdings in Bedok Point and ARF' s holding in the Malaysia Mall for cash.
Approximately S$284.9 million (including the S$80.0 million utilised as announced on 7 October 2020) (comprising S$284.9 million from the Private Placement which is equivalent to approximately 21.3% of the gross proceeds from the Equity Fund Raising) have been utilised to pare down existing indebtedness.
FCT used equity to fund this acqusition and reduced their debt, their gearing sure go down by quite a bit, just a lot of equity dilution.
On Balance sheet side, Assets: +1.1b, Liabilities: - 284m
Furthermore, at the time of the acqusition, the Price to Book of this counter was like in 1.1 - 1.2 range, they issue equity quite worth from the Reit' s perspective. Defintely better than some SG reits the P/B hovering around 0.6 - 0.9, still use equity to fund acqusitions.
FCT divested their holdings in Bedok Point and ARF' s holding in the Malaysia Mall for cash.
Approximately S$284.9 million (including the S$80.0 million utilised as announced on 7 October 2020) (comprising S$284.9 million from the Private Placement which is equivalent to approximately 21.3% of the gross proceeds from the Equity Fund Raising) have been utilised to pare down existing indebtedness.
FCT used equity to fund this acqusition and reduced their debt, their gearing sure go down by quite a bit, just a lot of equity dilution.
On Balance sheet side, Assets: +1.1b, Liabilities: - 284m
Furthermore, at the time of the acqusition, the Price to Book of this counter was like in 1.1 - 1.2 range, they issue equity quite worth from the Reit' s perspective. Defintely better than some SG reits the P/B hovering around 0.6 - 0.9, still use equity to fund acqusitions.
Jamesbond007 ( Date: 31-Oct-2020 12:10) Posted:
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Got quite a few other REITs also make acqusition during this period, if the buying price of the property is good, why not?
https://www.sgx.com/research-education/market-updates/20201028-s-reits-continued-pursue-acquisitions-october
https://www.sgx.com/research-education/market-updates/20201028-s-reits-continued-pursue-acquisitions-october
Jamesbond007 ( Date: 30-Oct-2020 16:54) Posted:
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Did Fraser add more debt?? Can give more details
Jamesbond007 ( Date: 31-Oct-2020 12:10) Posted:
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So what?
Even Capitalmall Trust,' s unit price is weak.
Acquisition for now doesn' t make much sense.
Equate to adding more debt when the storm clouds are still gathering moss.
Even Capitalmall Trust,' s unit price is weak.
Acquisition for now doesn' t make much sense.
Equate to adding more debt when the storm clouds are still gathering moss.
Their malls are sub urban . Whole of sg cannot travel . Cannot even go JB.. so where they shop ? U go Northpoint Hougang Mall Causeway Point c c... is it quiet or packed ?? I feel they are pressing down the price to collect . Assume all back to normal next year . The dividends are $1300 per year . At current price the yield is 6.16%
Jamesbond007 ( Date: 30-Oct-2020 16:54) Posted:
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Could the wiser investors take it that the trust is a dumping ground for its parent company?
Doesn' t make much sense to acquire so many retail properties during this period of time.
There are too much unknowns and adding on additional risks.
Doesn' t make much sense to acquire so many retail properties during this period of time.
There are too much unknowns and adding on additional risks.
Relentless weaknesses after rights issue.
FCT completes AsiaRetail Fund stake buy Bedok Point sale to close on Nov 9
FRASERS Centrepoint Trust (FCT) now wholly owns AsiaRetail Fund (ARF), having completed the purchase of the latter' s remaining 63.11 per cent interest from Frasers Property.
As a result, the existing portfolio management agreement and asset management agreements signed with Frasers Property Corporate Services (Singapore) will be terminated.
In a filing late Tuesday night, FCT' s manager said it will perform the asset management role in respect of ARF.
Also, the Singapore property-holding companies of ARF' s five malls - Tiong Bahru Plaza, Central Plaza, White Sands, Hougang Mall and Tampines 1 - have been converted into limited liability partnerships (LLPs). Aside from these malls, ARF owns the Central Plaza office property as well.
Following the LLP conversions, the real estate investment trust (Reit) has been granted tax transparency treatment for its share of the taxable income of each of the LLPs, received via sub-trusts.
The FCT manager said in another filing that about 76.3 per cent or S$1.02 billion of the gross proceeds from the equity fundraising were used to fund the ARF share acquisition.
Some 21.3 per cent or S$284.9 million of the proceeds went into paring down existing debts.
The preferential offering and private placement under the equity fundraising exercise were both priced at the bottom end and fully subscribed.
Separately, for Frasers Property' s proposed acquisition of Bedok Point mall from FCT, the property developer on Tuesday night announced that all the conditions precedent have been fulfilled.
The buyer, a wholly-owned subsidiary of Frasers Property, plans to exercise the call option on Oct 29, and the deal will then be completed on Nov 9.
FCT' s manager last month responded to unitholders' queries about its S$108 million sale of Bedok Point, given that the mall was acquired at S$129 million. The manager said the property' s size constraint and lack of direct connectivity to key transportation nodes limited its ability to be the dominant mall within Bedok Town Centre.
Seems it is in the downtrend now...
QT-VASCULAR ( Date: 28-Oct-2020 14:53) Posted:
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The placement price was $2.34 and now trading $2.21. what do you think?
hokpin ( Date: 28-Oct-2020 13:02) Posted:
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Why this counter keeps down trending? Is SGD 2.25 a safe entry price now?
down to 2.25 very jialat
Frasers Centrepoint Trust S$759.7m preferential offering fully subscribed
FRASERS Centrepoint Trust' s (FCT) preferential offering to raise about S$759.7 million in gross proceeds has been fully subscribed, the manager said in a bourse filing late on Wednesday.
Valid acceptances and excess applications stood at about 460.4 million, 1.4 times the total number of preferential offering units available.
About 324.6 million new units will be issued, based on 290 preferential offering units for every 1,000 existing units held as at 5pm on Oct 6. The issue price is S$2.34 per unit, which is at a 7 per cent discount to the volume-weighted average price of S$2.5171 based on all trades in FCT units on Sept 25 up to the time the underwriting agreement was signed on Sept 28.
The preferential offering looks to raise about S$759.7 million in gross proceeds, bringing the amount raised from FCT' s equity fundraising - which includes a separate private placement - to about S$1.33 billion.
About 76.3 per cent or S$1.02 billion of the S$1.33 billion will be used to finance FCT' s acquisition of the remaining 63.11 per cent stake in AsiaRetail Fund from the Reit' s sponsor Frasers Property.
Frasers Property will have a deemed interest in 40.7 per cent of the total FCT units in issue after the preferential offering units are listed and quoted on the Singapore Exchange (SGX).
The manager expects the preferential offering units to be listed and quoted on the SGX with effect from 9am on Oct 27.