In addition, FCOT has announced the following: The acquisition of Alexandra Technopark (with net lettable area of 1,048,607 sf) from F&N for $342.5 mln, payable via the issuance of 5.5% convertible perpetual pref units (CCPU) to F&N.
(The CPPU is redeemable strictly at the discretion of the trustee of FCOT, and convertible at the discretion of the holders, three years from the date of issue. The conversion price will be 17.685 cents, which is 30% premium to TERP. F&N will re-offer the CPPU to the unit-holders of FCOT within 6 months of the issue, subject to F&N retaining at least 40% of the opitstanding at all times, until repayment.)
FCOT will then enter into a Master Lease agreement with Fraser Centrepoint for a period of 5 years at a fixed annual net rental of $22 mln for a yield of 6.4%.
Banking facilities of $675 mln (S$500 mln + A$150 mln / S$175 mln) from a consortium of banks to refinance $624 mln existing loans due in H2 ’09. We believe the new facility, which has taken a bit of time, is because of FCOT’s improved balance sheet, especially after the property acquisition, as the nominator, which is debt, remains unchanged, while the denominator, which is total assets, grows.
1. While the debt overhang, which has made FCOT the worst performing reit, may have been removed, we believe there is limited upside. (FCOT’s gearing will drop from 58.3% as at Mar ’09 to 38.5%.)
2. The key question is why acquire an industrial property, when FCOT’s portfolio is presently made up of office and retail assets in Singapore (China Square, 55 Market), Australia and Japan.
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