Suburban retail REIT Frasers Centrepoint Trust (FCT) is divesting one of its assets in eastern Singapore as part of efforts to reduce debt.

The asset, Changi City Point, is being divested by the REIT to an unrelated third party for SGD338 million.

“This divestment is part of our strategic portfolio review to strengthen FCT’s portfolio resilience and is in line with our long-term objective to create value for FCT’s unitholders”, said Richard Ng, CEO of the REIT’s manager.

“The estimated net gain and capital gain are approximately SGD10.9 million and SGD20 million, respectively”, he added.

The estimated net proceeds from the divestment is approximately SGD329.7 million, after accounting for the divestment fee, divestment related expenses and the transfer of tenants’ security deposits.

The REIT intends to utilise the net proceeds to repay loans with higher interest rates and reduce FCT’s pro forma aggregate leverage from 40.2% to 37.1%.

Upon completion of the divestment, the REIT’s retail portfolio will comprise nine retail properties, all located in the suburban regions of Singapore.

The divestment is expected to settle on 15 November 2023.

FCT was last done on the Singapore EXchange at SGD2.23, which presently implies a distribution yield of 5.5% according to data on the Singapore REITs table.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.