Frasers Centrepoint Trust Is Acquiring New Malls

Frasers Centrepoint Trust Is Acquiring New Malls

Frasers Centrepoint Trust is acquiring new malls (Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square and Tampines 1) to its portfolio. On 3rd September 2020, Frasers Centrepoint Trust (“FCT”) announced the proposed acquisition of the remaining approximately 63.1% of the total issued share capital of Asia Retail Fund Limited (“ARF”) for approximately S$1,057.4 million from a wholly-owned subsidiary of Frasers Property Limited, the sponsor of FCT.

Acquisitions

Frasers Centrepoint Trust New Malls

Currently, there are 7 malls under Frasers Centrepoint Trust. They are Causeway Point, Northpoint City, Waterway Point, Changi City Point, Yew Tee Point, Anchorpoint and Bedok Point. After the acquisition, the number of malls will be increased to 11. The additional malls are Tiong Bahru Plaza, White Sands, Hougang Mall, Century Square and Tampines 1. There is also one office property Central Plaza that will be part of the acquisition.

Divestments

This is good news for existing Frasers Centrepoint Trust holders. The manager is seeking to divest Bedok Point for a sale price of S$108.0 million. In my opinion, with strong competition from Bedok Mall (belongs to CapitaLand Mall Trust), Bedok Point has significantly under performed.

Prior to FCT’s proposed ARF Acquisition, ARF will be divesting Mallco Pte. Ltd., a wholly-owned subsidiary of ARF which holds Setapak Central, a retail mall in Malaysia, for a sale price of approximately S$39.7 million, to a wholly-owned subsidiary of the Sponsor. Hence, the Enlarged Retail Portfolio will not include Setapak Central.

Current Dividend Yield

Frasers Centrepoint Trust has paid out a total of 12.07 cents in 2019. Based on the current share price of S$2.64, this translates to a current dividend yield of 4.57%. This is before the COVID-19 pandemic.

The estimated dividend yield for 2020 can be lower given most retail REITs are impacted by this pandemic. This can be seen from the 2Q2020 financial results in April whereby the dividend was slashed by 48.7%.

Frasers Centrepoint Trust Share Price 4 Sep 2020

2Q2020 Financial Results

2Q2020
(S$’000)
2Q2019
(S$’000)
YoY(%)
Gross Revenue 50,168 49,733 0.9%
Net Property Income 35,964 36,444 (1.3%)
Distributable Amount (Before Capital Retention) 36,002 28,808 25.0%
Distributable Amount (After Capital Retention) 18,000 29,158 (38.3%)
Distribution Per Unit (“DPU”) (cents) 1.610 31.37 (48.7%)

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