CGS-CIMB positive on Frasers Centrepoint’s deal for Waterway Point stake

View from Waterway Point mall, by Frasers Property, at Punggol New Town in Singapore; taken August 2018.View from Waterway Point mall at Punggol New Town in Singapore.

Frasers Centrepoint Trust’s plan to increase its stake in Waterway Point mall is a positive, given “substantial room” for rents to improve as the population in the developing Punggol area rises, CGS-CIMB said in a note Monday.

The trust said Friday it plans to acquire an around 6.67 percent stake in Waterway Point mall for S$86.6 million, in a deal which would bring its total interest to 40 percent.

CGS-CIMB noted Waterway Point is the only large mall in the area, which has a per capita trading area of 2.77 square feet, below Singapore’s average of 5.9 square feet per capita, indicating the region has relatively low competition.

In addition, tenant sales at the mall rose 10 percent on-year in 2018 to S$379.1 million, compared with 0.5 percent retail sales growth overall and with other retail REITs posting low single-digit growth, CGS-CIMB said.

The note also pointed to Frasers Centrepoint Trust’s inclusion in the FTSE EPRA/NAREIT Global Real Estate Index series, effective 23 September.

“This should raise FCT’s profile in the international investment community and further improve FCT’s trading liquidity,” the note said.

The brokerage raised its fiscal 2020-21 distribution per unit forecasts by 1 percent and increased its target price to S$2.93 from S$2.90, keeping an Add call.

The units were up 0.74 percent at S$2.73 at 9:24 A.M. SGT.

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