01 Dec 2021
Frasers Logistics & Commercial Asset Management Pte. Ltd., the manager of Frasers Logistics & Commercial Trust (“FLCT”, and the manager of FLCT, the “REIT Manager”), is pleased to announce that it has, through its wholly owned subsidiary, Worcester Property Co Limited, acquired a property to be developed at Worcester Six, a new business park (the “Property”) in the West Midlands, United Kingdom (the “UK”) from an unrelated third party, Stoford (Worcester) Limited with FLCT to fund the development of the new facility (the “Proposed Acquisition”). The all-in maximum consideration for the Proposed Acquisition on a completed basis is £28.3 million (approximately S$51.5 million) (the “Maximum Consideration”).
The Maximum Consideration is negotiated on a willing buyer and willing seller basis and taking into consideration the independent valuation conducted by CBRE Limited (“CBRE”) at £28.3 million (approximately S$51.5 million) as at 15 November 2021. The CBRE valuation is based on the income capitalisation approach and comparable market transactions.
The development of the Property is expected to be completed in the first quarter of 2023.
Mr. Robert Wallace, Chief Executive Officer of the REIT Manager, said, “The acquisition through a forward funding agreement for a prime, freehold high-specification facility in the UK is the continuation of our strategy to grow FLCT’s core logistics and industrial portfolio in existing markets. With a committed lease term of 15 years to an international distributor of flooring products, the Proposed Acquisition is expected to further enhance FLCT’s portfolio metrics while providing unitholders with a stable and long-term income stream.”
“The acquisition is our second third-party acquisition, reaffirming FLCT’s deal-sourcing capabilities whilst scaling up our footprint in the attractive UK logistics real estate space, where demand and take-up levels are expected to remain strong.”
KEY ATTRIBUTES OF THE PROPOSED ACQUISITION
The Property is strategically located within Worcester Six business park, a strong established location adjacent to junction 6 of the M5 Motorway in the county of Worcestershire. The centralised position of the site strategically serves the West Midlands, North West, South West and Welsh regions of the UK. Approximately 80.0% of the UK’s population can be reached in a four hours’ drive given the proximity to the National Motorway Network.
Worcester Six is a new Business Park with development planning consent for up to 1.5 million square feet (“sq ft”) (approximately 139,355 square metres (“sqm”)) to serve warehousing, industrial, technology, manufacturing and office users. To-date, over 700,000 sq ft (approximately 65,032 sqm) of employment space at Worcester Six has been delivered or committed by the developer, Stoford Properties Ltd, with other notable occupiers including Kohler Mira Limited, Kimal PLC, Zwick Roell Group, Super Smart Service Ltd and Spire Healthcare Group. The Worcester Six estate has also met the requirements to achieve a BREEAM Communities “Very Good” certificate.
The Property, when developed, will be a modern and high quality facility with a total lettable area of 180,121 sq ft (approximately 16,734 sqm) on a 3.48-hectare site. The Property is prominently positioned near the entrance to the business park with extensive frontage to the access road. The building will be constructed to high specifications with eaves height of 12.5 meters, 27 loading doors, extensive car parking spaces and a target Energy Performance Certificate rating of “A”.
Upon completion of the development, the Property will be leased to Alliance Flooring Distribution Limited (the “Tenant”) on a new 15-year lease, subject to five yearly upward only rent reviews. The Tenant is a subsidiary of Victoria PLC, an international manufacturer and distributor of innovative flooring products which is listed on London Stock Exchange with operations spanning across the UK, Europe and Australia. The Property will also be the Tenant’s headquarter flagship warehouse in the UK.
The Proposed Acquisition will be FLCT’s second warehouse property in the UK, increasing FLCT’s exposure to the UK market to 10.9% of its total portfolio value, from 10.2% prior to the Proposed Acquisition. Post-acquisition, the weighting of FLCT’s portfolio by value towards logistics and industrial will also increase from 61.1% to 61.4%. The Proposed Acquisition will also further deepen FLCT’s presence in the UK’s West Midlands region.
FUNDING AND FINANCIAL EFFECTS
The total cost of the acquisition is estimated to be approximately £29.1 million (approximately S$53.0 million), comprising the Maximum Consideration, the acquisition fee payable to the REIT Manager in units in FLCT, as well as professional and other fees and expenses in connection with the Proposed Acquisition (which includes stamp duty land tax, but excludes recoverable value-added tax). The Proposed Acquisition will be funded through internal resources and/or existing debt facilities.
The Proposed Acquisition is not expected to have any material effect on FLCT’s net tangible assets.
Based on the relative figures as computed on the bases set out in Rule 1006 of the listing manual of Singapore Exchange Securities Trading Limited (the “Listing Manual”), the Proposed Acquisition is a “Non-Discloseable Transaction” within the meaning of Rule 1006 of the Listing Manual.
 Unless otherwise stated, the S$ equivalent of the £ figures in this press release have been arrived at based on an assumed exchange rate of £1:S$1.82.
 CBRE was commissioned by the REIT Manager and Perpetual (Asia) Limited, as trustee of FLCT, to value the Property.
 CBRE’s valuation is on a completed and pre-let basis, and includes rent-free incentives which will be borne by the vendor and deducted from the Maximum Consideration.
 Assuming the Property is on a completed basis and all relevant planning permission is in place and the Property is leased to the Tenant based on the terms in the agreement for lease.
 Refers to Building Research Establishment Environmental Assessment Method.
 Indexed to the Retail Price Index on an annual compounded basis, collared at 2.0% per year and capped at 4.0% per year
 As at 30 September 2021 and based on portfolio value which excludes the recognition of right-of-use assets upon the adoption of FRS 116 Leases with effect from 1 October 2019.