Latest news with #FrasersHospitalityTrust
Business Times
06-07-2025
- Business
- Business Times
S-Reits with best debt profiles have an average gearing ratio of 33.5%
[singapore] Last month, the US Federal Reserve opted to maintain its benchmark interest rate, adopting a cautious stance despite speculation about a potential rate cut as early as July, with chair Jerome Powell stating that future decisions will be data-dependent. Market analysts now predict a 75-basis-point (bps) cut in 2025, up from the previously anticipated 50 bps. Singapore real estate investment trusts (S-Reits) have delivered a commendable performance, closing the first half of 2025 with a 4.2 per cent total return, as indicated by the iEdge S-Reit Index. Over the past 12 months, S-Reits have delivered a 10.5 per cent total return. Notably, the top 10 best-performing S-Reits have delivered double-digit returns in H1 2025. They include Frasers Hospitality Trust (21.5 per cent), CapitaLand Integrated Commercial Trust (14.3 per cent), Frasers Centrepoint Trust (11.4 per cent), CapitaLand Ascendas Reit (10.1 per cent) and Parkway Life Reit (10 per cent). The iEdge S-Reit Index concluded H1 2025 at 1,021 and touched 1,030 on Jul 3, a level which was previously tested three times – in November 2024, January 2025 and April 2025. The consensus estimate target price for the next 12 months is pegged at 1,159. From a balance-sheet standpoint, the S-Reit sector maintains an average gearing ratio of 40 per cent, reflecting prudent capital management; it is also well below the regulatory limit of 50 per cent. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The 10 S-Reits with the lowest gearing ratios are Sasseur Reit , Aims Apac Reit , Keppel DC Reit , Far East Hospitality Trust , Frasers Hospitality Trust, Frasers Logistics & Commercial Trust , Parkway Life Reit, Starhill Global Reit , IReit Global and Mapletree Pan Asia Commercial Trust . On average, these 10 have a gearing ratio of 33.5 per cent. Sasseur Reit, notable for its low gearing ratio of 25.9 per cent for the first quarter of 2025, reported a slight year-on-year (yoy) dip of 0.2 per cent in its entrusted management agreement (EMA) rental income for the same period. This was primarily due to weaker foreign exchange rates and lower variable income. However, in renminbi terms, Q1 2025 EMA rental income saw a 1.6 per cent yoy increase. The Reit's portfolio occupancy rate improved to 98.9 per cent, up from 97.9 per cent in the previous year, with higher occupancy recorded at its Chongqing Bishan and Kunming outlet malls in China. Its management remains committed to maintaining a healthy balance sheet to seize potential opportunistic acquisitions. Sasseur Reit has the right of first refusal on two assets in Xi'an and Guiyang, and could also look for acquisition opportunities within other assets managed by its sponsor. As at Q1 2025, its sponsor Sasseur Group manages a total of 18 outlet malls, including the four properties owned by the group. UOB Kay Hian research noted that the recent preference for quality names resulted in the three-month compounded Singapore Overnight Rate Average easing by 98 bps to 2.09 per cent in H1 2025. Despite this significant drop, there has been no positive price movement or re-rating for S-Reits. The research house expects broader recovery in liquidity from possible Fed rate cuts at the end of 2025 to lift the sector. However, global geopolitical uncertainties and tariff risks remain in focus, and investors should stay nimble and watch data as they head into the second half of the year. SGX RESEARCH The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the S-Reits & Property Trusts Chartbook.
Business Times
06-07-2025
- Business
- Business Times
S-Reits with lowest relative gearing have an average ratio of 33.5%
[singapore] Last month, the US Federal Reserve opted to maintain its benchmark interest rate, adopting a cautious stance despite speculation about a potential rate cut as early as July, with chair Jerome Powell stating that future decisions will be data-dependent. Market analysts now predict a 75-basis-point (bps) cut in 2025, up from the previously anticipated 50 bps. Singapore real estate investment trusts (S-Reits) have delivered a commendable performance, closing the first half of 2025 with a 4.2 per cent total return, as indicated by the iEdge S-Reit Index. Over the past 12 months, S-Reits have delivered a 10.5 per cent total return. Notably, the top 10 best-performing S-Reits have delivered double-digit returns in H1 2025. They include Frasers Hospitality Trust (21.5 per cent), CapitaLand Integrated Commercial Trust (14.3 per cent), Frasers Centrepoint Trust (11.4 per cent), CapitaLand Ascendas Reit (10.1 per cent) and Parkway Life Reit (10 per cent). The iEdge S-Reit Index concluded H1 2025 at 1,021 and touched 1,030 on Jul 3, a level which was previously tested three times – in November 2024, January 2025 and April 2025. The consensus estimate target price for the next 12 months is pegged at 1,159. From a balance-sheet standpoint, the S-Reit sector maintains an average gearing ratio of 40 per cent, reflecting prudent capital management; it is also well below the regulatory limit of 50 per cent. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The 10 S-Reits with the lowest gearing ratios are Sasseur Reit , Aims Apac Reit , Keppel DC Reit , Far East Hospitality Trust , Frasers Hospitality Trust, Frasers Logistics & Commercial Trust , Parkway Life Reit, Starhill Global Reit , IReit Global and Mapletree Pan Asia Commercial Trust . On average, these 10 have a gearing ratio of 33.5 per cent. Sasseur Reit, notable for its low gearing ratio of 25.9 per cent for the first quarter of 2025, reported a slight year-on-year (yoy) dip of 0.2 per cent in its entrusted management agreement (EMA) rental income for the same period. This was primarily due to weaker foreign exchange rates and lower variable income. However, in renminbi terms, Q1 2025 EMA rental income saw a 1.6 per cent yoy increase. The Reit's portfolio occupancy rate improved to 98.9 per cent, up from 97.9 per cent in the previous year, with higher occupancy recorded at its Chongqing Bishan and Kunming outlet malls in China. Its management remains committed to maintaining a healthy balance sheet to seize potential opportunistic acquisitions. Sasseur Reit has the right of first refusal on two assets in Xi'an and Guiyang, and could also look for acquisition opportunities within other assets managed by its sponsor. As at Q1 2025, its sponsor Sasseur Group manages a total of 18 outlet malls, including the four properties owned by the group. UOB Kay Hian research noted that the recent preference for quality names resulted in the three-month compounded Singapore Overnight Rate Average easing by 98 bps to 2.09 per cent in H1 2025. Despite this significant drop, there has been no positive price movement or re-rating for S-Reits. The research house expects broader recovery in liquidity from possible Fed rate cuts at the end of 2025 to lift the sector. However, global geopolitical uncertainties and tariff risks remain in focus, and investors should stay nimble and watch data as they head into the second half of the year. SGX RESEARCH The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the S-Reits & Property Trusts Chartbook.
Business Times
06-07-2025
- Business
- Business Times
Top S-Reits with lowest gearing ratios average 33.5% as investors await rate cuts
[singapore] Last month, the US Federal Reserve opted to maintain its benchmark interest rate, adopting a cautious stance despite speculation about a potential rate cut as early as July, with chair Jerome Powell stating that future decisions will be data-dependent. Market analysts now predict a 75-basis-point (bps) cut in 2025, up from the previously anticipated 50 bps. Singapore real estate investment trusts (S-Reits) have delivered a commendable performance, closing the first half of 2025 with a 4.2 per cent total return, as indicated by the iEdge S-Reit Index. Over the past 12 months, S-Reits have delivered a 10.5 per cent total return. Notably, the top 10 best-performing S-Reits have delivered double-digit returns in H1 2025. They include Frasers Hospitality Trust (21.5 per cent), CapitaLand Integrated Commercial Trust (14.3 per cent), Frasers Centrepoint Trust (11.4 per cent), CapitaLand Ascendas Reit (10.1 per cent) and Parkway Life Reit (10 per cent). The iEdge S-Reit Index concluded H1 2025 at 1,021 and touched 1,030 on Jul 3, a level which was previously tested three times – in November 2024, January 2025 and April 2025. The consensus estimate target price for the next 12 months is pegged at 1,159. From a balance-sheet standpoint, the S-Reit sector maintains an average gearing ratio of 40 per cent, reflecting prudent capital management; it is also well below the regulatory limit of 50 per cent. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The 10 S-Reits with the lowest gearing ratios are Sasseur Reit , Aims Apac Reit , Keppel DC Reit , Far East Hospitality Trust , Frasers Hospitality Trust, Frasers Logistics & Commercial Trust , Parkway Life Reit, Starhill Global Reit , IReit Global and Mapletree Pan Asia Commercial Trust . On average, these 10 have a gearing ratio of 33.5 per cent. Sasseur Reit, notable for its low gearing ratio of 25.9 per cent for the first quarter of 2025, reported a slight year-on-year (yoy) dip of 0.2 per cent in its entrusted management agreement (EMA) rental income for the same period. This was primarily due to weaker foreign exchange rates and lower variable income. However, in renminbi terms, Q1 2025 EMA rental income saw a 1.6 per cent yoy increase. The Reit's portfolio occupancy rate improved to 98.9 per cent, up from 97.9 per cent in the previous year, with higher occupancy recorded at its Chongqing Bishan and Kunming outlet malls in China. Its management remains committed to maintaining a healthy balance sheet to seize potential opportunistic acquisitions. Sasseur Reit has the right of first refusal on two assets in Xi'an and Guiyang, and could also look for acquisition opportunities within other assets managed by its sponsor. As at Q1 2025, its sponsor Sasseur Group manages a total of 18 outlet malls, including the four properties owned by the group. UOB Kay Hian research noted that the recent preference for quality names resulted in the three-month compounded Singapore Overnight Rate Average easing by 98 bps to 2.09 per cent in H1 2025. Despite this significant drop, there has been no positive price movement or re-rating for S-Reits. The research house expects broader recovery in liquidity from possible Fed rate cuts at the end of 2025 to lift the sector. However, global geopolitical uncertainties and tariff risks remain in focus, and investors should stay nimble and watch data as they head into the second half of the year. The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the S-Reits & Property Trusts Chartbook.
Business Times
26-05-2025
- Business
- Business Times
Frasers Property's privatising FHT does nothing for its minorities
[SINGAPORE] Minority investors of Frasers Hospitality Trust (FHT) are getting a second chance to exit their holdings by way of a privatisation offer. FHT's sponsor Frasers Property recently proposed privatising the stapled group at S$0.71 per stapled security via a trust scheme of arrangement. In September 2022, Frasers Property's earlier attempt to privatise FHT at S$0.70 per stapled security narrowly failed to get requisite support from minority stapled securityholders. Frasers Property's latest offer price is at a 10.7 per cent premium to FHT's end-March net asset value (NAV) per stapled security of S$0.6416. The offer price represents a 18.3 per cent, 25.4 per cent and 36.3 per cent premium to the last-transacted, three-month and 12-month volume-weighted average price prior to Apr 23, respectively, when the boards of FHT's managers announced the managers were conducting a review of FHT's strategy. Various reasons were cited as rationale for the proposed privatisation including macroeconomic headwinds and FHT's smaller scale relative to its peers. Also, despite revenue per available room at FHT's assets recovering to pre-Covid levels, inflationary cost pressures and other macroeconomic challenges have constrained meaningful distribution per stapled security (DPS) growth. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Frasers Property's perspective However, while FHT's minority investors are being given what looks to be a financially attractive offer, spare a thought for Frasers Property's minority shareholders. Spending resources in trying to privatise FHT, which made its trading debut in 2014, may not help improve Frasers Property's financial or share price performance. Frasers Property is facing macroeconomic headwinds while it has net debt of S$15.1 billion and net debt/total equity of 88.5 per cent as at end-March. Should it be raising its investment in FHT's portfolio of hospitality assets, whose prospects are challenging, when the property group ought to work harder to reduce leverage given a tough economic climate? FHT owns hotels and serviced residences in Singapore, Malaysia, Australia, Japan, UK and Germany. For the six months ended Mar 31, FHT's net property income declined 2.5 per cent from the year before because of elevated property taxes, utility costs driven by inflation and other property-related expenses. Due to lower net property income and higher finance costs, the trust's DPS fell 6 per cent year on year. Can Frasers Property, which is active across various business lines, find better ways to deploy its capital than investing more in FHT? The stapled group owns various overseas assets in countries whose currencies may depreciate further against the Singapore dollar. Moreover, Frasers Property loses valuable recurring management fees from managing FHT should it be privatised. Importantly, Frasers Property is trying to privatise FHT at a premium to book value, when the group itself trades way below book value. As at Friday (May 23), Frasers Property traded at a discount of 66 per cent to its end-March NAV per share of S$2.38. In short, equity market investors implicitly apply a hefty discount to Frasers Property's hospitality assets – potentially all of FHT's assets plus other hospitality ones that the group owns outside of FHT. Herein lies the critical need for Frasers Property's board of directors to clearly articulate what it plans to do with the FHT portfolio and its other hospitality assets. Perhaps, Frasers Property can increase the pace of selling hospitality assets. The group recently completed the divestment of Capri by Fraser in Barcelona, Spain. Last year, Tuan Sing bought Fraser Residence River Promenade, a serviced apartment development with 72 units, three conservation warehouses and 47 car park lots, located at Jiak Kim Street, from Frasers Property for S$140.9 million. Private fund option Can Frasers Property do better holding its hospitality assets in private funds compared with listed trusts? Possibly, private funds may value the group's hospitality assets more richly than the listed space. Maybe, Frasers Property can bundle its hospitality assets to sell to a private fund which the group holds a minority stake in and manages, based on latest independent asset valuations. In this way, Frasers Property lightens its balance sheet, earns management fee income and improves return on equity. Besides being FHT's sponsor, Frasers Property is a sponsor of Frasers Centrepoint Trust and Frasers Logistics & Commercial Trust (FLCT), which are both members of the benchmark Straits Times Index. While the former trades well relative to book value, the latter trades way below its latest NAV per unit. If the private fund route works, maybe FLCT can be privatised with its properties, then put into a private fund. While Frasers Property deserves kudos for being a responsible sponsor by offering FHT's minority investors a clean exit on financially reasonable terms, the property group has to be accountable to its shareholders. Frasers Property might see hospitality as a core business and have a long-term investment view – still, it must work harder to improve capital efficiency to benefit its shareholders. Ultimately, Frasers Property's board should emulate what the boards of FHT's managers did by conducting a review of Frasers Property's strategy. Its free float is small – about 11 per cent of its shares are held by the public, based on its latest annual report. TCC Assets, which is linked to Thai tycoon Charoen Sirivadhanabhakdi, owns around 86.9 per cent of Frasers Property. Given Frasers Property's small free float and deep discount to book value, the most plausible way to unlock value for its shareholders could be for Charoen to lead a consortium to privatise Frasers Property. Might the local bourse soon lose not only FHT but also Frasers Property, which is active in mixed-use, residential, retail, office, business park, logistics and industrial properties and has footprints in Singapore, Australia, Europe, China and South-east Asia? Privatisations and delistings are part of any functioning listed equities market. And minority investors of target entities will welcome receiving privatisation offers so long as these are not lowball ones. As privatisations play out on the local exchange, stakeholders working on developing Singapore's equities market must work fast and hard to make the local bourse more vibrant. (The writer owns shares in Frasers Property)
Business Times
25-05-2025
- Business
- Business Times
Will more S-Reits soon exit the local market?
WHEN the proposed privatisation of Frasers Hospitality Trust (FHT) was unveiled on May 14, I couldn't help feeling rather disheartened – not with the terms of the transaction but with the stated rationale for the deal. The decision to take FHT private, which came after a strategic review announced on Apr 23, seems to be based on a strong conviction on the part of its managers that the hospitality trust will face great difficulty growing its distributions per stapled security (DPS) and net asset value (NAV) in the face of a number of macroeconomic trends and structural factors. In particular, higher interest rates since the Covid-19 pandemic have increased FHT's debt costs, and weighed on the market value of its stapled securities. The relative strength of the Singapore dollar has also adversely affected FHT's DPS and NAV, as 59 per cent of its nearly S$2 billion property portfolio is located outside of Singapore – in Australia, Japan, Malaysia and the United Kingdom. Then, there is the general volatility of the hospitality sector, and periodic capital expenditure necessary to maintain the attractiveness of its hotel properties. Since FHT was listed in July 2014 up to the day before the strategic review was announced in April this year, Singapore-listed hospitality trusts achieved an average annualised total return of just 0.79 per cent, according to a presentation deck provided by FHT's managers. In the wake of this weak performance, the market valuations of hospitality trusts have naturally eroded. FHT traded at an average of 0.95 times NAV during the period spanning its listing in July 2014 until March 2020. Its peers – namely, CapitaLand Ascott Trust, CDL Hospitality Trusts, and Far East Hospitality Trust – traded at an average of 0.89 times NAV during the same period. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up During the Covid-19 pandemic period, from March 2020 to May 2023, FHT traded at an average of 0.76 times NAV while its peer group traded at 0.81 times NAV. Subsequently, from May 2023 until the strategic review was announced in April 2025, FHT traded at an average of 0.73 times NAV while its peers traded at an average of 0.72 times NAV. Are Singapore-listed hospitality trusts still useful securitisation platforms for their respective sponsor groups given their weak market valuations? Is it just a matter of time before we see more of them going private? Sagging performance, valuations Here's the thing: FHT and its peers aren't the only Singapore-listed real estate investment trusts (S-Reits) under pressure. Higher interest rates have weighed on the performance and market valuations of all S-Reits; and the strength of the Singapore dollar has been a drag on the returns of every S-Reit with significant overseas exposure. While the annualised total return of 0.79 per cent that FHT and its peers delivered between July 2014 and April this year was certainly weak, many other S-Reits didn't perform all that much better. According to the presentation deck provided by FHT's managers, S-Reits focused on commercial properties returned an average of just 3.61 per cent per year during the same period, while industrial and logistics S-Reits returned 4.92 per cent a year. The best performance came from 'specialised' S-Reits – such as Parkway Life Reit and Keppel DC Reit – which achieved an average annualised total return of 10.07 per cent during the period. Against this backdrop, it is perhaps not surprising that the crop of S-Reits reportedly coming to market are focused on burgeoning new sectors such as data centres, healthcare assets and student accommodation. Meanwhile, managers of S-Reits focused on traditional sectors and struggling to garner decent market valuations may have to rethink their business plans, and whether it makes sense to maintain their listings. This isn't exactly a new trend. Several S-Reits have been acquired or subsumed over the years as their sponsor groups adjusted their strategies and reached for scale. For instance, CapitaLand Integrated Commercial Trust is the result of the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust. Mapletree Pan Asia Commercial Trust came about through the amalgamation of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT). These deals did not always go smoothly. The merger of MCT and MNACT, for instance, faced minority shareholder resistance on both sides of the transaction. Mapletree Investments, the sponsor group behind the two Reits, eventually stumped up S$2.2 billion in cash to push the deal through. Is going private the next big trend for S-Reits as their managers and sponsor groups try to deliver value? FHT's managers said on May 14 that a number of options were considered to unlock value for investors. These included boosting the yields and valuations of FHT's existing properties through asset enhancement initiatives (AEIs), and scaling up FHT through a big merger or acquisition. In the end, however, it was decided that exiting the public market made the most sense. FHT's bid to go private comes on the heels of a similar move at Paragon Reit. In February, Paragon Reit's manager said privatisation would facilitate a major AEI at its flagship property, which accounts for 72 per cent of the value of its property portfolio. The manager said the AEI could cost as much as 21 per cent of the property's appraised value, and is necessary to defend its competitiveness amid growing competition from nearby properties and softer spending on luxury goods. Paragon Reit's privatisation deal, which will see investors receiving S$0.98 per unit, equivalent to 1.07 times NAV, was given the green light last month. Privatisations may boost sentiment While the privatisation of FHT and Paragon Reit might raise questions about the future of the S-Reit sector, the expectation of more such deals could well boost investor sentiment. The big question is whether investors are adequately compensated by the offerors. In the case of FHT, investors are being offered S$0.71 per stapled security by a unit of Frasers Property (FPL). This is 1.11 times FHT's adjusted NAV – higher than the average 1.04 times NAV at which precedent S-Reit privatisations since 2020 were priced; and well above the 0.62 times NAV at which hospitality trusts trade in the market. The offer price of S$0.71 also implies a total return of 27.8 per cent for investors who bought FHT at its initial public offering in 2014. FHT's peers delivered total returns over the same period ranging from minus 6.3 per cent to 24.5 per cent. One sticking point for some investors is that FPL narrowly failed to take FHT private at S$0.70 per share back in 2022, at a time when the hospitality sector was still reeling from the pandemic. It should be pointed out, however, that the previous offer price was only 1.07 times FHT's NAV. With the rise in interest rates since then, FPL could also be hard pressed to justify paying much more for FHT – especially with its own shares trading 65.5 per cent below NAV.
