Fraser Commercial Trust acquires Aussie Grade 'A' office building

 FCOT will acquire the remaining 50% interest in Caroline Chisholm Centre (CTL)for AUD83.0m or S$106m.

According to DBS, the price is 12.6% below the valuation. Including stamp fees and other professional fees, the acquisition cost approximately AUD 89.6m or S$114m.

FCOT will have 100% control when the acquisition is completed by April 2012.

DBS says that the Grade 'A' property in Australia will enhance portfolio quality. Completed in 2007, the property is a five-storey Grade ‘A’ office building in Canberra. Currently, the Commonwealth Government of Australia occupies the whole building for an 18-year lease term commencing 5 July 2007 with an upward rental reversion of 3.0% p.a.

"This acquisition will increase FCOT exposure to Australia from 25% to 30% of total asset value. It is in line with management’s strategy to increase its exposure in Singapore and Australia as well as divest its Japanese asset when opportunities arise," it said.

According to DBS, the trust is expected to finance this acquisition by debt and internal funds. The trust has a current cash balance of S$87m. Assuming fully debt-funded, DBS says that  the acquisition will raise its gearing ratio to c.40%.