SINGAPORE (Oct 2): Frasers Centrepoint Trust (FCT) on Sept 30 increased its stake in PGIM Real Estate Asiaretail Fund Limited to 24.82% from 21.13% previously.
Meanwhile, Frasers Property Limited (FPL) has also increased its stake in the fund to 63.11% from 53.7%.
This brings the total combined ownership of FCT and FPL to 87.93%.
The increase in stake was due to a redemption of 69,714 shares by the fund.
Following this, DBS Group Research is keeping its “buy” call on FCT with a target price of $2.95.
One of the three retail malls under the fund has reportedly found a buyer. Located in Penang, 1st Avenue Mall is being sold for RM153 million ($51 million), as announced by Ideal Group.
In a Wednesday report, analyst Derek Tan says, “We are not aware if the property is sold at a premium to the carrying value in the fund. However, we believe that the sale is significant as it is likely to further kick-start a winding down of the fund with proceeds being returned to the remaining investors, from which FPL /FCT will benefit.”
The analyst also likes the “bold and decisive steps” taken by Frasers Group’s entities to gain significant control and become a major shareholder of the fund in less than a year. This means that FCT and FPL will have significant room to manoeuvre and influence future operational and strategic direction of the fund.
Meanwhile, the remaining third parties own a smaller 12% stake without control. This, coupled with the fund’s continued realisation of its value through divestments of its non-core assets, could lead to remaining shareholders having their stakes redeemed in subsequent liquidity events going forward.
“The endgame is near and we see this as the key catalyst for both FPL and FCT if the group is able to gain further control of the properties and convert its stake into actual physical asset ownership,” adds Tan.
As at 2.33pm, units in FCT are trading 2 cents higher at $2.72, or 1.3 times FY19 book value with a distribution yield of 4.5%.
