Frasers Centrepoint Trust: Acquiring Northpoint City South Wing for SGD 1.2 billion

Narrow-moat Frasers Centrepoint Trust is acquiring Northpoint City South Wing at a total cost of SGD 1.2 billion. FCT intends to fund the acquisition through equity fundraising of SGD 400 million, issuing SGD 200 million in perpetual securities, and debt. The agreed property value of SGD 1,133 million implies a yield of 4.5%, which is tighter than the 4.75% cap rate of FCT’s existing asset, Northpoint City North Wing. This is because South Wing is newer and has a longer leasehold tenure than the adjacent North Wing. FCT expects the deal to be slightly accretive, adding 2.0% to its pro forma fiscal 2024 (ending September) distribution per unit. Management also estimates that FCT’s gearing will rise 1.3 percentage points to 39.8%, from 38.5% at the end of 2024.