News Summary
Frasers Property has launched a second bid to privatize its Real Estate Investment Trust, Frasers Hospitality Trust, valued at S$1.37 billion. The new offer of S$0.71 per share exceeds the previous attempt’s S$0.70 and aims to secure full control for operational flexibility amid challenging market conditions. Holding over 60% of shares, the company hopes to garner sufficient shareholder support for approval this time. Analysts are cautiously optimistic about the REIT’s outlook amid market challenges.
Singapore – Frasers Property has made a second bid to privatize its Real Estate Investment Trust (REIT), Frasers Hospitality Trust, valuing the trust at S$1.37 billion (approximately $1.1 billion). This latest offer comes as Frasers Property, which already holds over 60% of the REIT’s shares, looks to gain full control to enhance its operational flexibility amidst challenging market conditions.
The company has presented a buying price of S$0.71 per share for the remaining shares it does not already own, marking a slight increase from its previous attempt in 2022, when it offered S$0.70 per share. That initial bid fell short, securing acceptance from 74.9% of shareholders but failing to meet the required 75% threshold for regulatory approval.
Frasers Property remains optimistic about garnering enough support this time, citing a more compelling offer price and a softer outlook for the hospitality sector as factors that may sway shareholder sentiment. Further supporting this optimism is the relatively small asset size of Frasers Hospitality Trust, potentially simplifying the privatization process.
The proposed privatization is aimed at providing the Frasers Hospitality Trust with greater operational flexibility to navigate the difficulties posed by the current global environment. Enhanced control could facilitate quicker decision-making processes and adaptations in response to market changes, which are increasingly important as the hospitality sector faces various pressures.
Frasers Hospitality Trust, which has been listed on the Singapore Exchange since July 2014, consists of a diversified portfolio of 14 properties. This portfolio boasts over 3,400 rooms located in nine key cities spanning across Asia, Australia, and Europe. Some notable properties in this trust include the InterContinental Singapore, Novotel Sydney Darling Square, and The Westin Kuala Lumpur.
Currently, Frasers Property holds approximately 24.2% of Frasers Hospitality Trust shares, while the TCC Group, a substantial shareholder controlled by Thai billionaire Charoen Sirivadhanabhakdi, owns 36.7% of the shares. The market capitalization of Frasers Hospitality Trust stands at around S$1.34 billion, reflecting the REIT’s significant relevance in the region’s hospitality market.
In light of the latest market dynamics, analysts have indicated a generally favorable outlook for Frasers Hospitality Trust, assigning it a “Buy” rating with a price target of S$0.70. However, the trust is currently contending with challenges linked to rising interest rates and foreign exchange volatility, which have posed hurdles in its efforts to enhance dividends and net asset value.
The ongoing efforts by Frasers Property to privatize Frasers Hospitality Trust highlight the complexities associated with capitalizing on market opportunities in the midst of evolving economic conditions. As the hospitality sector continues to recover from the impacts of global turbulence, this second bid for privatization could signal a strategic move aimed at reinforcing operational capabilities and investor confidence.
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