For immediate release
FCOT unlocks value with the sale of KeyPoint realising a gain of S$72.8 million Singapore, 24 April 2012 - Frasers Centrepoint Asset Management (Commercial) Ltd. (the "Manager"), as the manager of Frasers Commercial Trust ("FCOT"), wishes to announce the proposed sale (the "Sale") of KeyPoint (the "Property") to Bayfront Ventures Pte Ltd for a consideration of S$360.0 million (the "Sale Consideration"). Bayfront Ventures Pte Ltd is a company jointly owned by Fragrance Group Ltd and World Class Land Pte Ltd, a subsidiary of Aspial Corporation Limited.Mr Low Chee Wah, Chief Executive Officer of the Manager, said, "This transaction is an excellent opportunity for FCOT to unlock the value of one of its older assets, thereby creating value for our Unitholders resulting in a gain of S$72.8 million. The divestment is in line with our strategy to reshape the portfolio with better assets which will provide further growth for our Unitholders.
We are pleased that the Sale was achieved at 26.3% or S$75.0 million above the last valuation of S$285 million in September last year. The Sale will strengthen the financial position of FCOT and provide financial flexibility for its next phase of growth."
Details of the SaleThe Sale Consideration was arrived at on a willing-buyer, willing-seller basis, after taking into account the Property's fair value of S$285 million1 as at 30 September 2011, other market comparable market transactions and its potential value as a development site.
The Sale is subject to, inter alia, the approval of the Unitholders and other terms and conditions as stated in the announcement dated 24 April 2012 to the Singapore Exchange relating to the proposed sale of KeyPoint.
Further details on the Sale will be set out in a circular to be issued to Unitholders of FCOT
("Unitholders") in due course.
Rationale for the SaleAs part of the strategy of reshaping the portfolio, the Manager conducts active and constant review of its portfolio of properties in order to maximise their value, thereby unlocking value for Unitholders. This includes identifying assets within its portfolio which may have a higher and better economic use other than in its present state or its present use. The Property was identified by the Manager as an asset that has reached its optimal economic life cycle in view that it is a 34 years old building and has a short
remaining lease of 62 years which may impact the future value of the Property.
1 The valuation of the Property as at 30 September 2011 was carried out using the net income capitalisation approach and discounted cash flow method analysis.
In addition, the Property requires a significant amount of additional capital expenditure to be spent on upgrading and rejuvenating the Property in order to achieve higher rentals and occupancy. Hence, the Manager considers that the Property is suitable for divestment.
The Manager believes the Sale will bring the following benefits to Unitholders:
a) The Realisation of the Value of the Property Above Current ValuationThe Sale Consideration is 26.3% or S$75.0 million above the Property's latest valuation of S$285.0 million as at 30 September 2011. Based on the annualised Net Property Income ("NPI") of the Property for the financial half year ended 31 March 2012, the Sale Consideration represents a NPI yield of 3.11%. This is significantly lower than the market capitalisation of
4.50% to 4.75% typically used by valuers for their capitalisation method of valuation for a comparable property. The estimated gain from the Sale, based on estimated net proceeds, is expected to be approximately S$72.8 million.
b) Strengthening the Financial Position of FCOT and Provide Financial FlexibilityThe net proceeds from the Sale could be utilised to reduce the debt liabilities of FCOT, thereby reducing the aggregate leverage of FCOT. The reduction in the aggregate leverage will provide FCOT with financial flexibility and debt headroom to acquire better quality assets and realise its reshaping strategy to strengthen the asset portfolio.
Description of the PropertyKeyPoint is a 34-year old non-Grade A commercial building situated at the fringe of Singapore's Central Business District and located at 371 Beach Road, Singapore 199597. It has a leasehold tenure of approximately 62 years remaining on the land. The Property has a net lettable area of approximately
28,797 square metres (or 309,963 square feet) and 227 carpark lots. The occupancy rate as at 31
March 2012 was 91.5%. On 12 August 2011, the Urban Redevelopment Authority granted an outline planning permission for the redevelopment of KeyPoint into a commercial and residential development subject to certain terms and conditions.
- End -
Analyst & media contact:Mr Jimmy Hui
Assistant Manager, Investor Relations
Frasers Centrepoint
Asset Management (Commercial) Ltd
Tel: +65 6277 2506
Email: jimmy.hui@fraserscentrepoint.com
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About Frasers Commercial Trust
Frasers Commercial Trust (FCOT) is a commercial real estate
investment trust (REIT) focused on growing shareholder value
for its unitholders through active asset management, sound
financial management and strategic investments. FCOT is
sponsored by Frasers Centrepoint Limited (FCL).
FCOT invests primarily in quality income-producing commercial
properties and its current portfolio includes nine quality
commercial buildings located in Singapore, Australia and
Japan. As at 31 March 2012, the portfolio represe nted a
combined appraised value of approximately S$2.0 billion.
FCOT, formerly known as Allco Commercial REIT, was listed on
the Main Board of Singapore Exchange Securities
Trading Limited (SGX-ST) on 30 March 2006.
On 14 August 2008, Frasers Centrepoint Limited acquired the
manager of FCOT and units in FCOT and renamed the manager of
FCOT, Frasers Centrepoint Asset Management (Commercial)
Ltd.
For more information on FCOT, please visit www.fraserscommercialtrust.com
About Frasers Centrepoint Limited
Frasers Centrepoint Limited (FCL), the wholly-owned property
arm of Singapore-listed consumer group Fraser and Neave,
Limited, is one of Singapore's top property companies, with
total assets close to S$9.7 billion. To date, the company has
a combined global land bank in excess of 30 million sq
ft.
From owning just a single shopping mall in 1983, Frasers
Centrepoint has since grown to become an integrated real
estate company with a portfolio of residential, commercial
and serviced residences spanning 20 countries across Asia,
Australasia, Europe and the Middle-East. Its serviced
residences management company, Frasers Hospitality, has
award- winning gold-standard serviced residences in 29
gateway cities. Frasers Property, FCL's international
property arm, develops world-class projects in UK, Australia,
New Zealand, China, Thailand and Vietnam.
FCL's listed entities comprise Frasers Centrepoint Trust
(FCT, a retail trust), Frasers Commercial Trus t (FCOT, an
office/business space trust) and Frasers Property China
Limited (FPCL).
As a testament to its excellent service standards, best
practices and support of the environment, the company is the
proud recipient of numerous awards and accolades both locally
and abroad.
Website: www.fraserscentrepoint.com
About Fraser and Neave, Limited
Established in 1883, Fraser and Neave, Limited (F&NL) is a
leading Asia Pacific Consumer Group with expertise and
prominent standing in the Food & Beverage, Property and
Publishing & Printing industries.
Leveraging its strengths in marketing and distribution;
research and development; brands and financial management; as
well as years of acquisition experience, F&NL provides key
resources and sets strategic directions for its subsidiary
companies across all three industries.
Listed on the Singapore stock exchange, F&NL ranks as one of
the most established and successful companies in the region
with an impressive array of renowned brands that enjoy strong
market leadership. It has shareholders' funds and total
assets employed of S$8 billion and S$14 billion,
respectively. F&NL is present in over 20 countries spanning
Asia Pacific, Europe and the USA, and employs over 17,000
people worldwide.
For more information on F&NL, please visit www.fraserandneave.com
IMPORTANT NOTICE
This announcement may contain forward-looking statements that
involve risks and uncertainties. Actual future performance,
outcomes and results may differ materially from those
expressed in forward-looking statements as a result of a
number of risks, uncertainties and assumptions.
Representative examples of these factors include (without
limitation) general industry and economic conditions,
interest rate trends, cost of capital and capital
availability, competition from similar developments, shifts
in expected levels of property rental income, changes in
operating expenses, (including employee wages, benefits and
training costs), property expenses and governmental and
public policy changes and the
continued availability of financing in the amounts and the
terms necessary to support future business.
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Investors are cautioned not to place undue reliance on these
forward-looking statements, which are based on the
Manager's current view on future events.
The value of Units and the income derived from them, if any,
may fall or rise. Units are not obligations of, deposits in,
or guaranteed by, the Manager or any of its affiliates. An
investment in Units is subject to investment risks, including
the possible loss of the principal amount invested.
Investors should note that they have no right to request the
Manager to redeem their Units while the Units are liste d. It
is intended that Unitholders may only deal in their Units
through trading on SGX-ST. Listing of the Units on the SGX-ST
does not guarantee a liquid market for the Units.
This publication is for information only and does not
constitute an invitation or offer to acquire, purchase or
subscribe for the Units. The past performance of FCOT and the
Manager is not necessarily indicative of the future
performance of
FCOT and the Manager.
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