On 30th August 2023, Frasers Centrepoint Trust announced the proposal to divest Changi City Point for a consideration of S$338.0 million in cash. The sale is approximately 4% above the valuation of S$325.0 million as at 31 July 2023. The estimated net gain and capital gain are approximately S$10.9 million and S$20 million, respectively.
The manager shared that the divestment is part of their strategic portfolio review to strengthen the resilience of Frasers Centrepoint Trust’s portfolio and is in line with their long-term objective to create value for Frasers Centrepoint Trust’s unitholders.
As an investor of Frasers Centrepoint Trust, I totally agree with the manager statement in terms of strengthening the resilience of their portfolio. Based on my opinion, Changi City Point has been underperforming for many years. In the FY23Q3 business update, the occupancy for Changi City Point has fallen 6.4% from 99.0% to 92.4%.
After divestment, Frasers Centrepoint Trust’s portfolio committed occupancy rate will improve from 98.7% to 99.3%.
Reduction of Debt
The manager intends to use the net proceeds from the Divestment to repay loans with higher interest rates. This will lower Frasers Centrepoint Trust’s aggregate leverage from 40.2% to 37.1% and strengthen Frasers Centrepoint Trust’s financial position.
Frasers Centrepoint Trust Divest Changi City Point Post Transaction
Upon completion of the Divestment, Frasers Centrepoint Trust’s retail portfolio will comprise of nine retail properties, all located in the suburban regions of Singapore.
After divestment of Changi City Point, the portfolio will comprise of Causeway Point, Century Square, Hougang Mall, NEX (effective 25.5% interest), Northpoint City North Wing (including Yishun 10 Retail Podium), Tampines 1, Tiong Bahru Plaza, Waterway Point (50.0% interest), White Sands and an office property (Central Plaza).
Completion of the Divestment of Changi City Point is expected to take place on 15 November 2023.