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The rating comes as FCT announced a one-third stake acquisition in suburban mall Waterway Point for $433.3 million.
After being placed under review for a potential downgrade of rating, Frasers Centrepoint Trust (FCT) received the ‘Baa1’ issuer rating from Moody’s Investor Service with a stable outlook, reported The Business Times.
This comes as Moody’s expects the credit metrics of the trust to improve following its equity issuance to partially finance two acquisitions.
FCT was placed under review on 6 March following its entry into 12 conditional sale-and-purchase agreements to acquire a 17.13 percent stake in PGIM Real Estate AsiaRetail Fund (PGIM Fund) for $342.5 million.
PGIM Fund owns and manages one office property and six retail malls in Singapore as well as four retail malls in Malaysia.
With the PGIM Fund stake purchase completed in April, FCT now owns an 18.8 percent interest. Frasers Property, its sponsor, also purchased 47.8 percent stake – bringing FCT and Frasers Property’s combined interest in the fund at 66.6 percent.
On 16 May, FCT announced that it will acquire a one-third stake in suburban mall Waterway Point for $433.3 million from its sponsor Frasers Property, as well as launch an equity fund-raising of at least $377.4 million.
The private placement saw FCT raise $369.6 million. The mainboard-listed trust intends to supplement the proceeds with an announced preferential offering of about $67.6 million.
Moody’s expect the two acquisitions to improve the trust’s earnings resiliency and geographic diversification.
But while FCT’s leverage is forecasted to increase following the Waterway Point acquisition, it will still fall below seven times in FY2020, which implies that it will remain within the 7.5-times threshold that was set for the ‘Baa1’ rating, said Moody’s.
Holding a stable outlook on the trust, Moody’s expect FCT to continue to deliver “strong operating results and maintain its strong financial profile”.
The ‘Baa1’ rating mirrors the stability of FCT’s income from well-located and good quality suburban retail malls within the city-state, which had resilient operating track records.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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