Singapore-listed Frasers Property Ltd announced that has entered into an agreement to divest of a 50% stake in Frasers Tower to an unnamed
long term strategic investor. Frasers Tower is its 38-storey, Grade-A office building at 182 Cecil Street in Singapore’s CBD.
The 38-storey, Grade-A office tower, Frasers Tower was completed in mid-2018 (Credit: Albert Chua/EdgeProp Singapore)
The sale will be done through the issue of new units in Aquamarine Star Trust, the entity that owns 100% of Frasers Tower. Following the sale, the “long-term investor” will own a 50% stake in Frasers Tower, with Frasers Property’s subsidiary, FCL Aquamarine, holding the remaining 50%.
The trustee-manager of Aquamarine Star Trust should raise $442.7 million from the issue of new units to the long-term strategic investor amounting to half the stake in the property, based on 50% of adjusted net asset value.
Completed in mid-2018, Frasers Tower has a total net lettable area (NLA) of around 685,000 sq ft and was 93% leased as at March 31, 2019. The building was valued at $1.965 billion, or around $2,869 psf of NLA. The value was arrived based on valuation reports by property consultants Knight Frank and Cushman & Wakefield, using the capitalisation approach and discounted cash flow analysis as at April 30, 2019.
F&B outlets on the first level of The Oasis, the three-storey retail and F&B podium at Frasers Tower (Credit: Albert Chua/EdgeProp Singapore)
Separately, Frasers Commercial Trust (FCOT), the Singapore-listed commercial real estate investment trust (REIT), announced on June 27, that it has declined the opportunity to participate as a co-investor with respect to the investment in Frasers Tower.
FCOT exercised its right of first refusal (ROFR) following notice given by its sponsor, Frasers Property Ltd, that the latter’s stake in Frasers Tower would be reduced from 100% to 50% by way of new equity injection from a new, unrelated co-investor.
“The manager has considered the opportunity and is of the view that the proposed investment on the proposed terms, would not be accretive to the distribution per unit of FCOT,” according to FCOT’s manager, Frasers Commercial Asset Management, in its announcement.
Frasers Property Ltd has not disclosed the identity of the long-term investor. However, there is speculation that it’s South Korea’s National Pension Service, said to be the world’s third-largest pension fund, with US$593.19 billion ($803.5 billion) in assets under management.