Fraser Commercial Trust (FCOT) / Fragrance / Aspial

Fraser Commercial Trust (FCOT) / Fragrance / Aspial: FCOT will sell its KeyPoint property to Bayfront Ventures, a 50/50 JV btwn Fragrance and Aspial, for $360m. The sale was achieved at 26% above the last valuation $285m in Sep ’11. This translates to an NPI yield of 3.11%, vs industry std assumption of 4.5- 4.75%. FCOT will book an est. gain of $72.8m. The proceeds will be use to reduce debt liabilities of FCOT. The costs of acq and devt will be funded internally by Fragrance and Aspial, and through bank borrowings. KeyPoint is a 34 yr old, non-Grade A commercial building located at 371 Beach Road. It has a leasehold tenure of 62 yrs remaining. NLA is 310k sf and 227 carpark lots. Occupancy as at end Mar was 91.5%. On 12 Aug ’11, the URA granted an outline planning permission for the redevt of KeyPoint into a commercial and residential devt. Land area is 7,269 sm. The site zoned as commercial can potential yield a commercial gfa of ~426.4k sf. Prior to the sale, FCOT trades at 7.2% FY12e yield, 0.47x P/B. The stock has 6 Buy ratings with TP btwn $0.94 - $1.14. Fragrance trades at 22.4x P/E. The counter has been making new highs, with the pending spinoff of its Global Premium Hotels just round the corner. Aspial trades at 8.9x P/E, with share price mirroring that of Fragrance.