Frasers Centrepoint Trust - UOB Kay Hian 2023-08-31: Sharpening Focus On Dominant Suburban Malls

• Frasers Centrepoint Trust intends to divest Changi City Point for S$338m in cash, which represents an attractive exit yield of 4.3%. Proceeds from the divestment would be utilised to repay loans with higher interest rates and reduce aggregate leverage from 40.2% to 37.1%. Cost of borrowings is expected to improve by 0.1ppt to 3.6%.
• - Read this at SGinvestors.io -

Rebalancing towards dominant suburban malls.

• Frasers Centrepoint Trust (SGX:J69U) has entered into a sale and purchase agreement with an unrelated third party to divest Changi City Point (CCP) for S$338m in cash. The divestment is expected to complete on 15 Nov 23. The estimated net divestment gain is S$10.9m above valuation at S$325m as at Sep 22. Exit yield was attractive at 4.3%.
• - Read this at SGinvestors.io -
• Portfolio matrices enhanced through divestment. Frasers Centrepoint Trust's portfolio committed occupancy is expected to improve from 98.7% to 99.3%. Average gross rent psf is expected to increase 3.7%, while tenants’ sales psf is expected to increase 3.9%.
• Improve resiliency of balance sheet. Management of Frasers Centrepoint Trust intends to utilise the net proceeds to repay loans with higher interest rates and reduce pro forma aggregate leverage from 40.2% to 37.1%. Cost of borrowings is expected to improve by 0.1ppt to 3.6%.

Retailer sentiment has improved.

• Read more at SGinvestors.io.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-31

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