Frasers Centrepoint Trust slated to acquire Changi City Point in 2014

FCT estimated to splurge $400m.

According to DBS, at c.200k sqft of NLA, Changi City Point is the largest dedicated retail outlet in Changi Business Park. We like this asset for (a) its exposure to the growing Changi Business Park, (b) its accessibility due to its close proximity to Expo MRT station, and (c) its close proximity to the Expo halls which attract visitors to the Expo conventions over the weekends.

At present, the trade mix by NLA comprises 40% for F&B, 50% for retail and 10% for services and entertainment. As the mall is still in its first lease cycle, we believe that there is substantial value to be unlocked from rental renewals and trade mix optimisation.

The mall is still in the process of attaining approvals for strata subdivision and will be fully injected into FCT upon receiving approvals. DBS expects the acquisition to be completed in FY14.

Here's more:

Acquisition will be yield neutral in FY14, but accretive in FY15. In our current forecasts, we have estimated the acquisition will complete in FY14 and will cost S$400m, funded by 75% debt and 25% equity.

Assuming an issue price of S$1.80, we have estimated that the acquisition will dilute the share base by c.56m units, representing c.7% of its current share base.

Despite this, however, the acquisition should be yield neutral in FY14 and yield accretive in FY15.