Frasers Property on Thursday announced that it plans to sell a 50 per cent stake worth S$442.7 million ($326.86 million) in subsidiary Aquamarine Star Trust (AST), which owns the 38-storey Grade A Central Business District (CBD) development called Frasers Tower.
It said its subsidiaries, Frasers Property Aquamarine Trustee Pte Ltd (FPAT) and FCL Aquamarine Pte Ltd (FCLA), have entered into an agreement for the transaction with an undisclosed strategic investor.
Completed in May 2018, Frasers Tower has a total net lettable area of approximately 685,000 sq ft of which 93 per cent is leased to a diversified tenant base as at March 31, 2019.
According to a Singapore Exchange (SGX) filing, FCLA and the investor have agreed on the total valuation for the office building at S$1.965 billion ($1.45 billion). The valuation was arrived after taking into account the independent valuations of the property as of April 30, 2019, by Knight Frank and Cushman Wakefield using a combination of the capitalisation and discounted cash flow approaches.
The proposed transaction value of S$442.70 million will be settled fully in cash. The proceeds were also based on 50 per cent of AST’s adjusted net asset value (NAV) immediately after closing the proposed transaction.
Separately, Frasers Commercial Asset Management Ltd (FCAM), in its capacity as the manager of Singapore-listed Frasers Commercial Trust (FCOT), has opted not to take up the first right of refusal as an unrelated co-investor in connection with the 50 per cent stake in Frasers Tower.
FCOT pointed out that FPL has given notice to its trustee, British and Malayan Trustees Limited (BMTL) that in return for the reduction from the existing 100 per cent stake to the proposed 50 per cent stake in Frasers Tower, FCOT, being a co-investor, would need to inject new equity, which in its opinion, would not be accretive to its distribution per unit (DPU) issued to unitholders.
FCOT went on to say that despite walking away from the proposed agreement as a co-investor, it remains open to exploring opportunities from both FPL, the sponsor of FCOT, and third parties for the acquisition of commercial assets that meets its investment criteria.
Business Times earlier reported talks between South Korea’s National Pension Service (NPS) and FPL regarding the stake sale in Frasers Tower.