News Summary
Frasers Property has launched a new buyout proposal to privatize Frasers Hospitality Trust with an offer valued at S$1.37 billion. This bid, at S$0.71 per share, comes after a previous unsuccessful attempt in 2022. With improved market conditions and a higher offer price, Frasers aims to consolidate its ownership of the REIT, which includes a portfolio of 14 hotels across various regions. Despite macroeconomic challenges, the company remains committed to its long-term investment strategy.
Singapore – Frasers Property, a leading real estate developer, is making its second attempt to privatize Frasers Hospitality Trust with a buyout offer valued at S$1.37 billion (approximately $1.1 billion). The company has proposed to purchase the remaining shares it does not already own at S$0.71 per share, slightly higher than its initial offer in 2022, which offered S$0.70 per share but ultimately failed due to insufficient shareholder support.
Currently, Frasers Property owns more than 60% of the shares in Frasers Hospitality Trust, and the latest bid is seen as potentially more successful due to an improved offer price and more favorable market conditions. Additionally, the relatively small size of the REIT’s assets is expected to play a role in facilitating the privatization process this time.
Frasers Hospitality Trust has seen its shares traded at S$0.68 before the current trading halt was announced, indicating a minor gap below the privatization offer price. The proposal follows a previous attempt in 2022 which received 74.9% shareholder approval, just falling short of the 75% margin required for approval. TCC Group, a major stakeholder owned by Thai billionaire Charoen Sirivadhanabhakdi, holds a substantial 36.72% stake in the Trust, while Frasers Property maintains a 24.23% stake.
The directors of Frasers Hospitality Trust believe that the privatization will provide a strong deal certainty and offer stapled security holders an opportunity to realize their investments at a premium over the net asset value. The REIT encompasses a portfolio of 14 hotels located across Asia, Australia, and Europe, which collectively provide 3,477 rooms. As of September 30, 2024, the appraised value of Frasers’ hotel portfolio stands at approximately S$2 billion.
Frasers Property has cited various macroeconomic challenges as the driving force behind its decision to pursue privatization. These challenges include weaker foreign exchange rates, higher interest rates, and cost inflation. The company also noted the impacts of external events such as Brexit and the persistent effects of the Covid-19 pandemic on the hospitality sector. Despite these challenges, Frasers Property maintains that their long-term investment strategy remains intact.
Since its listing on the Singapore Exchange in July 2014, Frasers Hospitality Trust has been an attractive investment option, but recent market conditions have prompted Frasers Property to reevaluate its investment strategy. The directors are optimistic that the current offer provides a compelling opportunity for stakeholders during a period when the hospitality industry is navigating significant hurdles.
Frasers Property is a significant player in the real estate market, with total assets valued at approximately S$38.9 billion. The company’s strategy aligns with its portfolio management and growth objectives as it aims to consolidate its holdings in Frasers Hospitality Trust and leverage the full potential of its hotel assets.
This latest attempt at privatization by Frasers Property highlights the ongoing volatility and evolving conditions within the real estate market, particularly in the hospitality sector, as it seeks to adapt to both internal and external pressures while providing value to its investors.
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