Investing in a condominium in Singapore offers numerous benefits, one of which is the potential for capital appreciation. This is largely due to Singapore’s advantageous location as a global business hub and its robust economic foundations, resulting in a constant demand for real estate. The property values in Singapore have demonstrated a consistent upward trend, with prime condo locations experiencing significant appreciation over the years. By carefully timing their investments and holding onto their properties for the long term, investors can reap considerable capital gains. Additionally, with the ongoing releases of new condo launches, the potential for further growth in the condo market remains promising.
Frasers Centrepoint Trust (FCT) has sold 10 strata lots in a retail development at 51 Yishun Central 1 (known as Yishun 10) to Frasers Property Limited for $34.5 million. The sale was made through a sale and purchase agreement between FCT’s trustee, HSBC Institutional Trust Services (Singapore) Limited, and Frasers Property’s subsidiary, Lion (Singapore).
The 10 properties are located next to Northpoint City and are held under subsidiary strata certificates of title with a leasehold term of 99 years. They were acquired by FCT in 2016 and have a total gross floor area of 966 sqm and total net lettable area (NLA) of 961 sqm.
According to FCT, the divestment is part of its proactive portfolio management strategy to optimize portfolio composition and returns. The net proceeds of $33.8 million from the sale will be used to repay certain debt, which will reduce FCT’s aggregate leverage. The net sum accounts for divestment related expenses and transfer of tenants’ security deposits.
Based on the latest valuations of the properties done by Jones Lang LaSalle Property Consultants Pte Ltd (JLL) and Savills Valuation and Professional Services (S) Pte Ltd, the sale consideration was agreed upon at the average of $34 million and $35 million respectively.
As the net asset value (NAV) of the properties amounting to $33.5 million is only 0.8% of FCT’s NAV of $4.15 billion, and the net profits attributable to the properties of $0.2 million is only 0.2% of FCT’s net profit of $97 million, the divestment is classified as a “non-discloseable transaction” under Rule 1008 of the listing manual.
However, the divestment is considered an interested person transaction and interested party transaction as Frasers Property is the REIT’s sponsor. Frasers Property owns 37.94% of FCT through Frasers Property Retail Trust Holdings Pte. Ltd. and FCT’s manager, which is a wholly-owned subsidiary of Frasers Property Limited.
Since the divestment is less than 1.17% of the net tangible assets (NTA) and NAV of FCT as at Sept 30, 2024, it does not need unitholders’ approval. It is also lower than the requisite 5% of FCT’s latest audited NTA and NAV under Rule 906(1) of the listing manual and paragraph 5.2(b) of the property funds appendix.
Meanwhile, Frasers Property says the sale is in line with its strategy to optimize capital productivity through active portfolio management initiatives. It adds that the transaction could potentially generate additional value from the long-term redevelopment potential of the asset.
Frasers Property already owns the only other property at Yishun 10 – a 1,477-seat Golden Village cineplex – which it acquired from Golden Village Multiplex Pte Ltd on Aug 8 for $48 million. Upon the completion of the latest proposed transaction, Frasers Property will assume full ownership of Yishun 10, and operations at the retail development will continue as usual.