Frasers Centrepoint Trust (FCT) SGX: J69U announced the acquisition of an additional 12.07% stake in PGIM Real Estate AsiaRetail Fund (ARF) on 1 Jul 2020 for S$197.2 million.
ARF owns Century Square,Tiong Bahru Plaza, Hougang Mall, White Sands Mall, Tampines Mall and Central Plaza office block in Singapore and a mall in Malaysia.
PGIM Real Estate is actually the property investment division of Prudential Financial.
FCT's stakes in this Fund will increase to 36.89% after the deal is completed by the end of Jul 2020.
Its sponsor, Frasers Property will own the remaining 63.11% in ARF.
This deal is fully funded by debt and possibly at its current low borrowing rate of 2.44%.
This acquisition is slightly yield accretive and reinforces FCT's strategy of investment in suburban malls in Singapore.
However, gearing will increase from 34.7% to closer to 40%.
As highlighted by DBS Research, “We see this as the key catalyst for both FPL and FCT if the group is able to gain further control of the properties and convert...