News Summary
Frasers Property is making a renewed effort to take Frasers Hospitality Trust private with a proposed valuation of S$1.37 billion. The new offer of S$0.71 per share is an increment from the previous unsuccessful bid that failed to gain sufficient shareholder support. With over 60% ownership of the trust, Frasers aims to consolidate its hospitality investments amid a challenging market. The decision for shareholders remains crucial as the company navigates industry dynamics and potential operational efficiencies.
Singapore – Frasers Property is making a second attempt to take its real estate investment trust (REIT), Frasers Hospitality Trust, private with a proposed deal valuing the trust at S$1.37 billion, approximately USD $1.1 billion. This move comes after the company’s first attempt in 2022 was unsuccessful due to insufficient shareholder support.
Frasers Property has offered S$0.71 for each share of Frasers Hospitality Trust not already owned by the company. Currently, Frasers Property holds over 60% of the total shares in the trust. In the previous buyout attempt, Frasers Property proposed a price of S$0.70 per share but fell short of the required 75% shareholder approval, achieving only 74.9% of that threshold. The current offer reflects an increase, potentially making it more appealing to shareholders.
The outlook for the hospitality sector has softened in recent times, which could play a significant role in making the new offer more attractive to investors. As the industry experiences challenges, stakeholders may consider the buyout as a chance to realize their investments amid a less favorable market climate.
Frasers Hospitality Trust owns a diverse portfolio comprising 14 hotels that include 3,477 rooms situated in key locations across Asia, Australia, and Europe. Among the notable properties within this portfolio are the 171-room Park International London and the 593-room ANA Crowne Plaza Kobe in Japan. As of September 30, 2024, the appraised value of Frasers Hospitality Trust’s hotel portfolio is estimated to be around S$2 billion.
TCC Group, the controlling entity behind Frasers Property, holds 36.7% of Frasers Hospitality Trust, providing a substantial stake in the decision-making process regarding the potential buyout. Should the transition to private ownership succeed, stapled security holders would have the opportunity to exit their investments at a premium rate relative to the net asset value of the trust.
Frasers Property itself is a major player in the real estate sector, with a portfolio of properties valued at S$38.9 billion. This running total signifies the company’s significant footprint in both the local and international markets, spanning various real estate segments.
At the time of the news release, the reported share price of Frasers Hospitality Trust stood at SGD $0.68. This indicates a premium proposed by Frasers Property’s latest offer, which could entice shareholders to consider the deal more favorably than in the previous attempt.
The circumstances surrounding this second buyout attempt could signal a deeper strategy by Frasers Property to consolidate its interests within the hospitality sector. By taking Frasers Hospitality Trust private, the company may aim to enhance operational efficiencies and deploy resources more effectively amidst changing industry dynamics.
As shareholders ponder their options, the future of Frasers Hospitality Trust and its portfolio will hinge on the outcome of this second buyout attempt. With the offered price reflecting increased shareholder returns, the decision remains critical for those involved in the trust.
As developments unfold, stakeholders will be closely observing the response from other investors and evaluating the potential impact on the broader hospitality market.
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