Saturday, July 6, 2019

Journey To Retirement Part 16.1 -- Frasers Centrepoint Trust

On 16th May 2019, Frasers Centrepoint Trust made an announcement on acquisition of a 33.33% interest in Waterway Point and equity fund rising (private placement and preferential offering) of no less than approximately S$421.7 million to be used in the acquisition.  The private placement price was S$2.382/unit and preferential offering which retail investors get to involve was S$2.35/unit.

Like what was mentioned in Journey To Retirement Part 16 -- Frasers Centrepoint Trust, one of the potential upside for the stock is acquisition of Waterway Point and three years after that the objective has been met.

When I first invested in 2016 at a price of $1.80 (the lowest price level since 2016, which months later strategically became $1.6314), the reason for me willing to invest rather than wait for the next recession was none other than Waterway Point.  I was and still am in a very good position to see the benefit Waterway Point that can bring to Frasers Centrepoint Trust thus made that decision rather than like majority of the fundamental/value investors looking at metrics for a guide to invest.  To me fundamental/value investing is more than just looking at metrics, one has to know the nature of the business, be able to physically observe and feel the growth and potential of the business.  The price of $1.80 then has never factor in the great potential of Waterway Point.  On the other hand, I'm not ignorant enough to pour every cents into this investment just because of Waterway Point.  My strategy back in 2016 was get a portion of it because of Waterway Point and wait for next recession to fill up the rest.  As such, I still have cash sitting aside waiting for that day (probably can realize within the next 1 to 2 years :) ).

Due to that small portion of holding, I was entitled to the preferential offering at $2.35/unit.  Initially, was quite unsure whether to accept that offering as firstly, the price of $2.35/unit is at least 30% more than my initial holding price of $1.80/unit, doesn't look cheap to me haha.  Secondly, the 31-for-1000 offering should I accept provide very little dilution to my holding and forgoing that has very little impact on my dividend return too.  As such, I decided to try my luck to accept the offer and apply for excess to see how many can I get in the end.  As a result of that, I was allocated a quantity that eventually raise my holding by 60% and thus increasing the holding price from $1.6314/unit to $1.9021/unit.  At that eventual holding price and quantity, it does look like a good deal for me given that I still have cash sitting aside waiting to get more during recession for this stock.

So after Waterway Point, what other potential upsides await Frasers Centrepoint Trust ?  Well in the pipeline there are still Eastpoint, Robertson Walk and Valley Point from its sponsor (Frasers Property Ltd).  On 5th April 2019, Frasers Centrepoint Trust announced the completion of acquisition of 17.8% stake in PGIM Real Estate Asia Retail Fund Ltd for S$356.4 million.  PGIM Real Estate Asia Retail Fund Ltd owns and manages 6 retail malls in Singapore -- Tiong Bahru Plaza, White Sands, Liang Court, Hougang Mall, Century Square and Tampines 1 -- and office property, Central Plaza.  Theoretically, any further assets acquisition or means to grow revenue by PGIM Real Estate Asia Retail Fund Ltd will indirectly provide the upside for Frasers Centrepoint Trust.  This PGIM Real Estate Asia Retail Fund Ltd in fact is something a surprise to me as didn't see that coming.

Just a little information to share, Tim Ho Wan, the Hong Kong 1 Michelin Star Dim Sum Restaurant, has just recently opened another of it outlet at Waterway Point.  So far, it has been pulling in long queue of consumers especially during the weekend and holiday.  More interestingly, Tim Ho Wan is just diagonally opposite another famous Dim Sum Restaurant Din Tai Fung.  Both outlets have the ability to draw in consumers to the mall.


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