Frasers Centrepoint Trust (FCT) has agreed to acquire an additional 24.5% interest in Nex for $523.1 million. The trust entered into a share purchase agreement (SPA) with its sponsor, Frasers Property TQ5 , to acquire the total issued share capital of FCL Emerald. FCL Emerald is wholly-owned by Frasers Property and holds a 49.0% interest in Nex. FCL Emerald also owns a 49.0% interest in Frasers Property Coral, which is the trustee-manager of private trust, NP Trust. NP Trust holds a 50.0% stake in Gold Ridge, which holds Nex.
The acquisition follows FCT’s initial acquisition of 25.5% in Nex in February 2023. Following the acquisition, FCT will have an effective interest of 50.0% in the mall.
“Nex is an excellent asset with strong financial and operational performance, and is a strategic fit to FCT’s prime suburban retail portfolio. This acquisition reinforces our focus and leadership position in the Singapore prime suburban retail market,” says Richard Ng, CEO of the manager.
“The increased stake in Nex will further diversify FCT’s income base, enhance its portfolio resilience and improve its overall retail portfolio performance. The growth opportunities at NEX through asset enhancement initiatives (AEI), tenant remixing and rent improvement will support FCT’s objective to deliver regular and stable distributions to its unitholders. This acquisition is also distribution per unit (DPU) accretive,” he adds.
The agreed value of Nex is $2.13 billion on a 100% basis or $3,352 psf of net lettable area (NLA). The agreed property value is the average of the two independent valuations of Colliers’ estimate at $2.14 billion and Jones Lang LaSalle’s estimate of $2.11 billion.
The net property income (NPI) yield based on Nex’s NPI for the FY2023 ended Sept 30, 2023, and the agreed property value is approximately 4.8%.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
FCT intends to finance the total acquisition cost through the net proceeds from a proposed private placement and debt financing.
On Jan 25, FCT also announced that it intends to raise $200.0 million through a private placement of an undetermined number of units at an issue price of between $2.16 and $2.204 per new unit. The price range represents a discount of between 1.8% and 3.8% to the adjusted volume weighted average price (VWAP) of $2.2446 per unit and approximately 3.6% and 5.6% to the VWAP of $2.2871 per unit based on all trades made in FCT on the SGX on Jan 24. The funds raised will be used for the acquisition.
The new units will be issued under a general mandate that was given to FCT's manager at its annual general meeting (AGM) held on Jan 22, where some 856.0 million units can be issued under the mandate. Based on the minimum issue price, the private placement would see 92.6 million new units to be issued.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
The issue price will be determined by the manager and underwriters following a bookbuilding process. DBS Bank D05 , Merrill Lynch (Singapore), Oversea-Chinese Banking Corporation (OCBC) O39 , United Overseas Bank U11 (UOB) and Maybank Securities were appointed as the underwriters for the private placement.
The acquisition will be subject to unitholders' approval at an extraordinary general meeting (EGM).
Units in FCT closed at $2.28 on Jan 24.
