Frasers Centrepoint Trust - OCBC Investment 2016-11-07: Proposed acquisition of strata lots at Yishun 10 Cinema Complex

FRASERS CENTREPOINT TRUST J69U.SI

Frasers Centrepoint Trust - Proposed acquisition of strata lots at Yishun 10 Cinema Complex

Frasers Centrepoint Trust (FCT) announced that it has entered into sale and purchase agreements to acquire 10 strata-titled ground floor units of the retail podium of Yishun 10 Cinema Complex from two wholly-owned subsidiaries of Bonvests Holdings.
The retail podium has a total NLA of 10,413 sq ft with an occupancy rate of 99.5%, as at 30 Sep 2016.

The aggregate consideration sum is S$37.8m, which is ~5.6% below the independent valuation of S$40m, as at 30 Sep 2016.
Including stamp duties and other fees, the estimated total cost of the proposed acquisition is ~S$39.4m, and we expect this to be funded by FCT’s internal resources and debt, given the relatively small scale of the transaction and FCT’s healthy gearing ratio of 28.3%.
Although we estimate the initial NPI yield of the proposed acquisition to be slightly above 4%, we believe the strategic location of the retail podium adjacent to FCT’s Northpoint Shopping Centre would allow management to create long-term value in the Yishun region.
Maintain BUY and S$2.33 fair value estimate on FCT.

Wong Teck Ching Andy CFA OCBC Investment | http://www.ocbcresearch.com/ 2016-11-07

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 2.330 Same 2.330