Frasers Centrepoint Asset Management (Commercial), the manager of Frasers Commercial Trust has announced the completion of the acquisition of 357 Collins Street in Melbourne, Australia, for A$237.7 million ($246 million).
The total acquisition cost comprises the purchase consideration of A$222.5 million and transaction costs of A$15.2 million.
The total acquisition cost was mainly funded by net proceeds of $122.7 million from the private placement which was completed on Aug 3 and the drawing down of new term loan facilities of $40 million and A$75 million which were entered into on Aug 6.
The acquisition marks FCOT’s maiden entry into the Melbourne Central Business District office market, the second largest office market in Australia. It also brings FCOT’s portfolio of commercial buildings located in Singapore and Australia to six.
Low Chee Wah, CEO of the manager, observes that with the acquisition of 357 Collins Street, FCOT’s portfolio size will increase from $1.8 billion to $2 billion.
“FCOT will have an additional income stream and this will contribute towards the financial results from the fourth quarter of this financial year onwards. This yield accretive acquisition will also strengthen the distributions in the long term,” he says.
Committed occupancy at the property has risen from 95% as at May 29 to 98.4% as at July 31.
“The fixed rental escalation of between 3.75% to 4% per annum will also provide good organic growth and income stability,” he notes.
In addition, the manager also announced that FCOT and Frasers Hospitality China Square Trustee (FHCS Trustee) have entered into a building agreement for FHCS Trustee to use the additional gross floor area of 16,000 sq m to undertake the development of a 16-storey hotel and commercial project at China Square Central.
“In the long run, China Square Central is poised to benefit as the hotel will raise its profile as an integrated development while the 1,081 sq m of new lettable spaces created with better frontage and visibility as part of the commercial project will lead to potential higher income in the future,” adds Low.
With the entry into the building agreement, FCOT realises net proceeds of $44.1 million today. This represents the hotel consideration of $44.8 million for granting a long lease of the hotel to FHCS Trustee upon the issuance of the Temporary Occupancy Permit for the hotel and commercial project, and net of fees and expenses incurred for the China Square Central Hotel Transaction of approximately $0.7 million.
Besides using the net proceeds to prepay a portion of existing bank borrowings, as the net proceeds has been determined to be capital in nature, it will also be available as capital distributions and may be distributed to unitholders through quarterly distributions during the construction period for the hotel and commercial project at the discretion of the manager.
According to the manager, the capital distributions, if made, would supplement and mitigate the temporary loss of income from China Square Central during the construction period.
Units in FCOT closed 2.12% lower at $1.385.
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The total acquisition cost comprises the purchase consideration of A$222.5 million and transaction costs of A$15.2 million.
The total acquisition cost was mainly funded by net proceeds of $122.7 million from the private placement which was completed on Aug 3 and the drawing down of new term loan facilities of $40 million and A$75 million which were entered into on Aug 6.
The acquisition marks FCOT’s maiden entry into the Melbourne Central Business District office market, the second largest office market in Australia. It also brings FCOT’s portfolio of commercial buildings located in Singapore and Australia to six.
Low Chee Wah, CEO of the manager, observes that with the acquisition of 357 Collins Street, FCOT’s portfolio size will increase from $1.8 billion to $2 billion.
“FCOT will have an additional income stream and this will contribute towards the financial results from the fourth quarter of this financial year onwards. This yield accretive acquisition will also strengthen the distributions in the long term,” he says.
Committed occupancy at the property has risen from 95% as at May 29 to 98.4% as at July 31.
“The fixed rental escalation of between 3.75% to 4% per annum will also provide good organic growth and income stability,” he notes.
In addition, the manager also announced that FCOT and Frasers Hospitality China Square Trustee (FHCS Trustee) have entered into a building agreement for FHCS Trustee to use the additional gross floor area of 16,000 sq m to undertake the development of a 16-storey hotel and commercial project at China Square Central.
“In the long run, China Square Central is poised to benefit as the hotel will raise its profile as an integrated development while the 1,081 sq m of new lettable spaces created with better frontage and visibility as part of the commercial project will lead to potential higher income in the future,” adds Low.
With the entry into the building agreement, FCOT realises net proceeds of $44.1 million today. This represents the hotel consideration of $44.8 million for granting a long lease of the hotel to FHCS Trustee upon the issuance of the Temporary Occupancy Permit for the hotel and commercial project, and net of fees and expenses incurred for the China Square Central Hotel Transaction of approximately $0.7 million.
Besides using the net proceeds to prepay a portion of existing bank borrowings, as the net proceeds has been determined to be capital in nature, it will also be available as capital distributions and may be distributed to unitholders through quarterly distributions during the construction period for the hotel and commercial project at the discretion of the manager.
According to the manager, the capital distributions, if made, would supplement and mitigate the temporary loss of income from China Square Central during the construction period.
Units in FCOT closed 2.12% lower at $1.385.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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