Brokers' take
Frasers Commercial Trust > Hold OCBC Investment Research, Dec 15 Dec 15 close: S$1.42 Target price: S$1.42
FRASERS Commercial Trust (FCOT) announced that it has entered into a 50:50 JV with its sponsor, Frasers Centrepoint Limited, to acquire Farnborough Business Park (FBP), which comprises 14 commercial buildings in the UK. The purchase consideration of the asset comes in at £174.6 million, which is at a slight discount to the property valuation of £175.05 million.
FBP has a long weighted average lease expiry of 8.3 years with a high occupancy rate of 98.1 per cent. Based on pro forma NPI as at Sept 30, 2017, we estimate the S$ NPI yield of FBP to be ~6.4 per cent, which is higher than that of FCOT's existing portfolio yield of ~5.5 per cent.
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