25 Jan 2022
SINGAPORE, 25 JANUARY 2022
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 FLCT, through its wholly-owned sub-trust Frasers Commercial Trust, has entered into a sale and purchase agreement with an unrelated third-party purchaser, for the sale of the leasehold property at 18, 20 and 22 Cross Street, Singapore3 (“Cross Street Exchange”) for a consideration of S$810.8 million (the “Consideration”).
The Consideration represents a 28.3% premium to Cross Street Exchange’s book value of S$632.0 million as at 30 September 2021. The proposed divestment of this non-core leasehold Central Business District (“CBD”) commercial property is in line with the REIT Manager’s proactive asset management and portfolio rebalancing strategies, providing opportunities to re-weight FLCT’s portfolio into the logistics and industrial asset class. Post-divestment, FLCT’s portfolio weighting2 towards logistics & industrial will increase to 66.9%, from 61.1% previously.
The proposed divestment will also enhance FLCT’s portfolio metrics, with a higher overall portfolio occupancy rate of 97.1% and a longer weighted average lease expiry profile (“WALE”) of 5.0 years, from 96.2% and 4.8 years respectively, prior to the divestment4.
Mr. Robert Wallace, Chief Executive Officer of the REIT Manager, said, “The divestment of Cross Street Exchange is transacted at an attractive premium over its book value, re-weighting our portfolio towards logistics and industrial properties. The divestment will enhance our portfolio metrics with a higher overall portfolio occupancy rate and longer WALE and will provide FLCT with significant financial strength and flexibility.”
The estimated net proceeds from the divestment is approximately S$802.7 million, after taking into account divestment fees of S$4.1 million5 to be paid to the REIT Manager in cash as well as other divestment-related expenses. The net divestment proceeds may be used to fund potential acquisition opportunities, finance capital expenditure, repay existing debt, make distributions to FLCT’s unitholders and/or other general corporate requirements.
Assuming that 49.2% of the net proceeds are used to repay outstanding debt, FLCT’s aggregate leverage is expected to be lowered by 4.4 percentage points from 33.7% %6 to 29.3 %7 on a pro forma basis with debt headroom increased to approximately S$3,017.2 million8 post-divestment.
Completion of the proposed divestment is expected to take place on 31 March 2022.