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The much anticipated Google deal at Alexandra Technopark finally went through and was formally announced on 25 June 2019 by Frasers Commercial Trust (“FCT”). Since my last posting on 19 January 2019, there has been no more news after the Business Times announced that FCT and Google Asia Pacific Pte Ltd were discussing taking up space at Alexandra Technopark. For the past few months, I thought that Google Asia Pacific had walked away from the lease negotiation and was very worried over how FCT would fare should the global economic downturn happen by end of this year. When I saw the price hitting a record high of S$1.66 per unit last week, my sixth sense tells me that FCT must have announced some major news on the Google deal and quickly checked their SGX announcement. True enough, Google had signed up with FCT.
It is simply wonderful that Google Asia Pacific has decided to expand further into Singapore and to take up 344,100sqft of space which represents 33.3% of the current total net lettable area of Alexandra Technopark to drive the committed occupancy rate to 93.7% as at 25 June 2019. What sweetens the deal, even more, is that Google has committed to a 5 years long lease term. It is widely believed that the average price achieved is around S$4psf which translates to an annual contribution of S$16.5Mil and a total contractual value worth a staggering S$82.6Mil. FCT Management team has scored a major victory in winning this major tenant. The tenancy agreement will commence in the 1st quarter of 2020.
With such a high-quality tenant win in the portfolio of FCT, its earning sustainability will be greatly enhanced even in the event of an economic downturn. As such, its share price may continue to soar and hit S$1.70 per unit as the market should re-rate it closer to the yield spread by other commercial REITs such as Capitaland Commercial Trust. Anyway, I will not be selling away FCT anytime soon unless there are significant changes in its earnings visibility and business fundamentals.
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