[SINGAPORE] The acquisition of Northpoint City’s south wing may be financed either with or without the issuance of perpetual securities, said the manager of Frasers Centrepoint Trust (FCT) in a bourse filing on Saturday (May 17).
Proceeds from FCT’s recent equity fundraising have been used to repay its existing debt. The trust will also draw down additional debt financing to pay for its recent acquisition of Northpoint City when the acquisition is finalised.
Should the manager issue perpetual securities, the proceeds will be used to pay its existing debts, added the manager. An illustrative coupon of 4.2 per cent per annum was assumed for the potential issuance of perpetual securities while an all-in interest rate of 3.3 per cent was assumed for new debt financing.
“The final decision regarding the funding structure will be made by the manager at the appropriate time, taking into account the prevailing market conditions,” said the manager.
The manager was responding to questions from unitholders through a bourse filing ahead of an extraordinary general meeting to be held on May 23 to approve the acquisition of the south wing of suburban mall Northpoint City, located in Yishun, for S$1.17 billion. The acquisition will be done via the purchase of North Gem Trust, a private trust that holds the interests in the target property.
The manager had raised a total of S$421.3 million from a preferential offering and private placement that closed on Mar 26.
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The manager also responded to questions on the potential cost savings from having Northpoint City under a single owner.
FCT’s manager said that currently, certain commercial decisions such as leasing are managed independently by the different owners.
The re-mixing of tenancies may involve lease adjustments and tenant relocation between wings. Additionally, comprehensive asset enhancement initiatives may involve reconfiguring spaces to provide overall benefits, which might not be equally distributed between both wings.
Having Northpoint City under a single ownership will also remove constraints from separate ownership and unlock overall value across the mall, said the manager.
Moreover, both wings were built at different periods with separate sets of mechanical and electrical system facilities. Integrating these facilities across both wings could also potentially free up gross floor area in either wing to be re-deployed for commercial retail purposes.
While it is unable to provide an estimate of the cost savings from having Northpoint City under a single owner, the manager said that there is potential for stronger net property income margins based on its benchmarking of Northpoint City to similar-sized malls in its portfolio.
The manager also shared the value of Northpoint City’s north wing. The existing part of Northpoint’s north wing had an appraised value of S$255.9 million during FCT’s initial public offering in 2006. The other part of the north wing, which was acquired in 2010, had a value of S$164.55 million.
The latest FY2024 valuation of Northpoint City’s north wing is S$788 million.
Units of FCT closed 1.4 per cent or S$0.03 higher on Friday at S$2.19.
