Frasers Property makes second bid to privatise Frasers Hospitality Trust in $1.37 billion deal
SINGAPORE - Thai billionaire Charoen Sirivadhanabhakdi's Frasers Property is making a second attempt to take private its hospitality real-estate investment trust at a valuation of $1.37 billion.
The company on May 14 announced an offer of 71 cents per share for Frasers Hospitality Trust (FHT).
This represents a 7 per cent premium to FHT's last traded price of 66.5 cents before the counter announced a trading halt on May 13. It is also a 36.3 per cent premium to the FHT's volume weighted average price for the 12-month period up to the last trading date.
Frasers Property owns a 24.23 per cent stake in FHT, while its majority shareholder and Mr Charoen's family conglomerate TCC Assets has a 36.72 per cent stake.
An attempted privatization in 2022 at 70 cents a share - which valued FHT then at $1.35 billion - failed when it fell short of a 75 per cent shareholder threshold required.
The latest offer to take the trust private is the outcome of a strategic review conducted by the directors of the trust after they evaluated various options, both companies said in a joint statement.
They cited challenges due to the changing macroeconomic environment, such as a weaker foreign exchange rate against the Singapore dollar, higher interest rate environment, global cost inflation and unforeseen events such as Brexit and the Covid-19 pandemic.
'The directors view the privatisation as a viable option for stapled securityholders to immediately realise their investment at a premium to net asset value and offers strong deal certainty in terms of timing and execution,' they said.
'Frasers Hospitality Trust is expected to continue to face both macroeconomic headwinds and structural limitations which may limit its ability to grow its distribution per stapled security and net asset value,' they added.
The hospitality trust's smaller size relative to its peers has also contributed to a higher cost of equity and lower debt headroom which limits its ability to scale up, they said.
Its properties are also located in areas where the currencies have depreciated significantly - by 20 per cent to 30 per cent - against the Singapore dollar since its listing, they noted.
FHT has a portfolio of 14 hotels and serviced residences across nine cities in Asia, Australia and Europe. The properties include InterContinental Singapore, Fraser Suites Sydney and Park International London.
Listed on the SGX mainboard since 2014, FHT has a market capitalisation of $1.27 billion, with a portfolio valued at $2 billion as of Sept 2024.
The trust's managers chief executive officer Eric Gan said: 'The decision to propose this scheme was not taken lightly.
The scheme will require the necessary regulatory and court approvals, and is subject to the approval of a majority of its stapled securityholders.
Frasers Property group chief financial officer Loo Choo Leong said the group's strategy is focused on delivering sustainable and targeted long-term returns across cycles.
'Hospitality is a core business for Frasers Property, and while we remain mindful of near-term challenges facing the hospitality sector, we maintain a long-term investment perspective,' he said.
Frasers Property, which also called for a trading halt on May 13, has total assets of approximately $38.9 billion as at March 31.
It operates across commercial and business parks, hospitality, industrial and logistics, residential and retail, with businesses in South-east Asia, Australia, Europe, Britain and China.
It also owns or operates serviced apartments and hotels in 20 countries across Asia, Australia, Europe, the Middle East and Africa.
Sue-Ann Tan is a business correspondent at The Straits Times covering capital markets and sustainable finance.
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