Frasers Centrepoint Trust - CGS-CIMB Research 2022-09-13: Taking Another Bite Of Waterway Point

Frasers Centrepoint Trust - Taking Another Bite Of Waterway Point

  • Frasers Centrepoint Trust (SGX:J69U) entered into a sale and purchase agreement on 12 Sep 22 to acquire an additional 10% stake in Waterway Point from Japanese developer, Sekisui House Ltd (1928 JP), increasing Frasers Centrepoint Trust's stake in Waterway Point to 50%. See Frasers Centrepoint Trust's Announcement dated 2022-09-22 for details of the acquisition. The agreed property value of S$1,312.5m was 0.96% above Waterway Point's 31 Jul 2022 valuation of S$1,300m, translating to a cap rate of 4.5%.
  • We estimate completion of the acquisition to happen in mid-1Q23. Frasers Centrepoint Trust did not provide pro-forma DPU accretion, but we estimated acquisition DPU accretion for Frasers Centrepoint Trust in FY23F and 24F to be 0.2% and 1.0% if fully debt funded, 1.1% and 1.9% if internally funded.
  • According to our estimates, Frasers Centrepoint Trust's gearing would increase from 33.9% as at 30 Jun 2022 to 36.6% and 35.8% post-acquisition respectively.
  • Frasers Centrepoint Trust acquired its initial 33.3% stake in Waterway Point from its Sponsor on 11 Jul 2019 and a subsequent 6.7% stake from Sekisui on 18 Sep 2019. Waterway Point’s valuation has remained stable since acquisition. However, negative reversions during the pandemic have compressed NPI yield from 4.7% at time of initial investment to 4.5% in FY21.
  • Nonetheless, we view the acquisition favourably given Waterway Point’s high committed occupancy of 98.4% as at 30 Sep 2022 and its superior location. Leases signed at Waterway Point in 1H22 achieved positive reversions of 2.2%. We also expect Waterway Point’s shopper catchment to be uplifted by the increase in residential units in the Punggol precinct.
  • We leave our estimates for Frasers Centrepoint Trust unchanged pending the completion of the acquisition.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | 2022-09-13
SGX Stock Analyst Report ADD MAINTAIN ADD 2.750 SAME 2.750

Previous report by CGS-CIMB:
2022-07-28 Frasers Centrepoint Trust - Tenant Sentiment Holding Up

Target prices by 4 other brokers at Frasers Centrepoint Trust Target Prices.
Listing of broker reports at Frasers Centrepoint Trust Analyst Report.

Relevant links:
Frasers Centrepoint Trust Share Price History,
Frasers Centrepoint Trust Announcements,
Frasers Centrepoint Trust Dividends & Corp Actions,
Frasers Centrepoint Trust News Articles


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