Frasers CentrePoint Trust

[swakoo]

FCT share price currently below NAV of $1.77 - an major stumbling block for a typical accretive acquisition.

However, sentiments towards REIT sector appears to be on the mend so there remains hope for parent FCL to go further asset light.

The major determinants of whether an acquisition is yield accretive or not:
- cost of equity financing: this speaks to the NAV or aggregate cap rate of the reit
- cost of debt financing
- cost of asset to be acquired
- potential use of financial engineering

It is notable that FCT's 2 rounds of acquisition thus far have been yield accretive without use of financial engineering and without rights issues that require unitholders' attention/action. By using a combination of placement and debt financing and pricing the asset appropriately. One of the few (or only?) reits with this type of track record.

In the current (still) low interest rate environment, it may still be possible to continue with this type of track record even if the cost of equity is not so optimal. It will probably be imperative for FCL to keep it's reputation from the old F&N days, to sustain an asset light approach.