Frasers Centrepoint Trust Issues New Units as Divestment Fee in Related Party Deal: What Investors Need to Know

Key Points from the Announcement

• Divestment Fee Payment: Frasers Centrepoint Trust (FCT) has issued 73,806 new units to its manager, Frasers Centrepoint Asset Management Ltd., as payment for a divestment fee of S\$172,500.
• Unit Issue Price: The units were issued at S\$2.3372 per unit. This price reflects the volume weighted average price of FCT units traded on the SGX over the 10 business days preceding the issue date.
• Interested Party Transaction: The transaction is classified as an “interested party transaction” under MAS regulations, which means special governance and disclosure rules apply. Specifically, the units issued as the divestment fee cannot be sold for at least one year from the date of issuance.
• Enlarged Unit Base: Following this issue, the Manager now holds 111,531,086 units, while the total units in issue for FCT stands at 2,029,390,226.
• Divestment Background: The payment is linked to the divestment of ten strata lots at Yishun 10, as previously announced.

Important Shareholder Considerations and Potential Price Sensitivity

• Dilution: The issuance of new units, even though minimal in the context of FCT’s total issued units, contributes to minor dilution for existing unitholders.
• Governance and Transparency: As this is an interested party transaction, regulatory scrutiny and transparency requirements are heightened. This may be viewed positively by investors who prioritize governance standards.
• Liquidity Lock-Up: The divestment fee units issued to the Manager cannot be sold for one year. This lock-up may reassure investors that there will not be an immediate increase in selling pressure from the Manager’s side.
• Implications for Future Transactions: The use of units, rather than cash, to pay fees in related party transactions may set a precedent for future asset management fees or divestment fees, impacting future earnings and dilution expectations.
• Market Sensitivity: While the transaction is relatively small in quantum, its classification as an interested party deal and the issuance of new units are events that investors typically monitor for potential impacts on valuation and trust governance.

Full Details of the Transaction

On October 1, 2025, Frasers Centrepoint Trust, managed by Frasers Centrepoint Asset Management Ltd., issued 73,806 new units as a divestment fee payment to its Manager. The divestment fee, totalling S\$172,500, arises from the previously announced sale of ten strata lots at Yishun 10.

The issue price of S\$2.3372 per unit is based on the 10-day volume weighted average price on SGX immediately preceding the issuance. This method aligns with market norms for pricing such transactions and ensures that the fee aligns with prevailing market values.

The transaction is notable as it is classified as an “interested party transaction” under MAS’s Code on Collective Investment Schemes, due to the relationship between the Trust and its Manager. As a result, the units received by the Manager as a fee cannot be sold within a year, a measure intended to align management’s interests with those of other unitholders and prevent immediate market overhang.

After this issuance, the Manager’s aggregate holdings rise to 111,531,086 units, while FCT’s total units in issue increase to 2,029,390,226. The quantum of new units is small relative to the total, but such transactions are closely watched by institutional investors for their implications on corporate governance, potential dilution, and management alignment.

Finally, the announcement reminds investors that the value of FCT units and income derived from them may fluctuate, and that investments in FCT carry risks, including the risk of loss of principal. Unitholders have no right to redemption outside of market trading, and there is no guarantee of liquidity in the SGX market. The announcement also stresses that the information is not investment advice and that the units are not registered or offered in certain jurisdictions, including the United States, EEA, UK, Canada, Japan, or Australia.

Conclusion

While the direct impact of this issuance is minor in terms of dilution, the event is noteworthy for its governance implications, use of equity for fee payments, and the regulatory lock-up on issued units. Investors should monitor such “interested party transactions” as they may impact trust structure, management incentives, and future capital management policy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are encouraged to conduct their own research and consult professional advisers before making investment decisions. The author and publisher assume no liability for any actions taken based on the information contained herein.

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