Frasers Property brings in capital partner for Northpoint City (South Wing)

FRASERS Property has brought in a strategic capital partner for Northpoint City (South Wing), it announced on Tuesday.

TCC Prosperity (TCCP), through its wholly-owned subsidiary Bright Bloom Capital, has subscribed for 50 per cent of units of North Gem Trust (NGT), which owns the property.

The transaction values Northpoint City (South Wing) at S$1.1 billion and allows the group to recognise a gain of S$50 million over the asset's last audited book value as at Sept 30, 2019.

The estimated consideration which has been paid on completion is S$1, subject to post-completion adjustments.

Based on Frasers Property's unaudited results for the half year ended March 31, the book value of the property is about S$1.05 billion. Net losses attributable to 50 per cent of the equity interest in NGT is about S$0.23 million, while net tangible liabilities attributable to a 50 per cent equity interest in NGT is about S$197.8 million.

Following the deal, Frasers Property's subsidiary, FCL Amber, will hold the remaining 50 per cent stake in NGT. Besides the estimated consideration, TCCP has extended a loan of S$174.5 million to pay for half the total amount owed by NGT to FCL Amber under a previous loan.

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TCCP is part of the TCC Group companies and entities controlled by Charoen Sirivadhanabhakdi and his wife Khunying Wanna Sirivadhanabhakdi. The husband and wife are also directors and controlling shareholders of Frasers Property.

As part of the agreement, Frasers Property and Bright Bloom Capital have pre-emptive rights on each other's stake in Northpoint City (South Wing).

Located at 930 Yishun Avenue 2, Northpoint City (South Wing) comprises a two-storey retail podium with two basements, incorporating amenities such as carparking facilities as well as the Nee Soon Community Club and the Yishun Bus Interchange. It was completed in December 2017 and has a lettable area of 26,994 square metres.

Frasers Property Retail continues to manage Northpoint City.

Said Low Chee Wah, chief executive officer of Frasers Property Retail: "Northpoint City (South Wing) is a strategic component of the group's S$8.63 billion retail assets under management in Singapore. This transaction is timely as it maintains the group's discipline in optimising capital productivity.

"Amid challenges brought about by Covid-19, we are pleased to have the support of TCC as our strategic capital partner for this transaction. We will continue to manage Northpoint City, thereby enhancing the group's long-term return by growing our asset and property management fee income."

In addition to growing with its real estate investment trusts, the group has been stepping up its capital-partnership initiatives with third-party investors.

The transaction follows the equity injection by an investor into Frasers Tower in fiscal 2019, which resulted in both partners holding a 50 per cent stake in the property. Last June, The Business Times reported that South Korea's National Pension Service was expected to take a stake in Frasers Tower.

Shares of Frasers Property were trading at S$1.23, up S$0.02 or 1.7 per cent as at 4.03pm on Wednesday.