SINGAPORE (July 10): Frasers Commercial Trust (FCOT) is divesting 55 Market Street, its 16-storey commercial property at Raffles Place, to an unnamed third party for $216.8 million.
In a Tuesday filing, FCOT’s manager says the consideration sum is equivalent to $3,020 per sq ft based on the building’s net lettable area (NLA) of 71,796 sq ft as at end-March, and represents a 44.5% premium above its $150 million valuation as at 1 July.
This is almost thrice the original purchase price of $72.5 million in 2006, adds the manager, and implies an annualised net property income (NPI) yield of 1.7% based on the NPI booked by the 55 Market Street over the latest quarter ended March.
Assuming all net divestment proceeds are used to pay existing debt, the transaction will reduce FCOT’s aggregate leverage as at end-Sept 2017 to 26.5% from 34.7% previously on a pro-forma basis, and would have been accretive to FCOT’s distribution per unit for FY17.
See: Frasers Commercial Trust’s 4Q DPU falls 1.6% to 2.41 cents
Jack Lam, CEO of the manager, describes 55 Market Street as the smallest of FCOT’s assets and therefore non-core.
“Monetising [55 Market Street] at a gain of close to $67 million above valuation and almost tripling the initial purchase price unlocks significant value. It also creates opportunities for us to recycle capital to higher-yielding investments and pursue other growth initiatives as we continue to reshape and strengthen the portfolio for long-term growth,” says Lam.
Units in FCOT closed 2 cents higher at $1.39 on Tuesday.
