Frasers Centrepoint Trust

UOBKayhian on 2 June 2014

FY14F DPU (S$ cent): 11.1
FY15F DPU (S$ cent): 11.3

Financing has been secured for the Changi City Point (CCP) acquisition with a private
placement of 88m new units at a tight 2.5% discount to VWAP to raise S$161.5m in
equity. With a 52/48 debt/equity mix, the acquisition is expected to raise forward DPU
by 1.8-2.7%, while gearing remains conservative at 30.2%. Watch for further uplift as
the mall transitions away from outlet stores with rentals expected to rise 10-15% in the
first lease cycle. Maintain BUY on FCT with a higher DDM-derived target price of
S$2.21 (from S$2.15).
Private placement of 88m new units to raise S$161.5m. Frasers Centrepoint Trust
(FCT) has completed a private placement of 88m (10.7%) new units at an issue price of
S$1.835 per unit to raise gross proceeds of S$161.5m. Lead managers and
underwriters are DBS Bank and Citigroup. Frasers Centrepoint Limited has undertaken
to subscribe for 36.2m units at the issue price.
Issue price at 2.5% discount to adjusted VWAP of S$1.8816 on 29 May. This is at the
top end of the indicative range of S$1.79-1.835 and reflects strong demand with the
placement of 51.8m units four times subscribed from new and existing Asian and
European institutional investors. Estimated advanced distribution of 2.288 S cents for
the period from 1 April to 9 June for existing unitholders. New unitholders will not be
entitled to the advanced distribution. Books closure for the advanced distribution is 9
June. Proceeds to partially fund the S$312.5m acquisition of Changi City Point with the
new equity accounting for 52% of the acquisition cost and the remainder to be funded
by debt.
Maintain BUY with a higher target price of S$2.21 (from S$2.15) based on DDM
(required rate of return: 6.8%, terminal growth: 1.8%). We raise our FY14-16F DPU
estimates by 0.9% to 2.7% after factoring in the acquisition of Changi City Point offset
by the additional equity and debt financing required.