Frasers Property Launches Second Bid to Privatize Frasers Hospitality Trust

News Summary

Frasers Property has initiated another attempt to privatize its REIT, Frasers Hospitality Trust, valued at S$1.37 billion. This comes after an earlier bid failed due to lack of shareholder support. The recent offer at S$0.71 per share reflects efforts to attract shareholders amid challenges in the hospitality sector, including economic uncertainties and global inflation. FHT manages a portfolio of hotels across Asia and aims for strategic long-term growth through privatization.

Singapore – Frasers Property, a prominent real estate company, has initiated a second bid to privatize its Real Estate Investment Trust (REIT), Frasers Hospitality Trust (FHT). This latest attempt is valued at S$1.37 billion, equivalent to approximately $1.1 billion, amid ongoing challenges in the hospitality sector.

Frasers Property currently holds over 60% of FHT’s shares and is proposing to acquire the remaining shares at S$0.71 each, a slight increase from its first attempted buyout last year, which offered S$0.70 per share but failed due to insufficient shareholder support. The increase in the offer price reflects the company’s response to the prevailing market conditions, making the offer more attractive to shareholders.

The renewed privatization effort is significant amidst a softening outlook for the hospitality industry. Factors such as a high-interest rate environment, fluctuating foreign exchange rates against the Singapore dollar, and global cost inflation have impacted FHT’s operations. Furthermore, unexpected events such as Brexit and the ongoing repercussions of COVID-19 have posed additional challenges since FHT’s listing in 2014.

FHT, which has a market capitalization of S$1.27 billion, manages a portfolio of 14 hotels and serviced residences across nine Asian cities, with the overall asset value estimated at S$2 billion as of September 2024. Frasers Property’s existing stake in FHT is 24.33%. The trust’s relatively small asset size could potentially enhance the likelihood of success for this current privatization attempt.

The decision to privatize comes after a comprehensive strategic review of FHT’s business model in light of the economic hurdles it has faced. The review indicated that unlocking value for shareholders through privatization may provide a more stable pathway forward for the trust.

Frasers Property emphasizes that its commitment to the hospitality sector remains strong, and it is strategically positioning itself for long-term growth despite present-day adversities. The company views hospitality as a core aspect of its operations and intends to enhance FHT’s value through this proposed privatization.

The market response to Frasers Property’s new offer will be closely watched, as analysts and investors gauge the potential implications for both the company and the broader hospitality sector in Singapore and beyond.

Deeper Dive: News & Info About This Topic

• Wall Street Journal: Frasers Property Mulls Privatization
• Wikipedia: Real Estate Investment Trust
• Reuters: Frasers Property to Take REIT Private
• Encyclopedia Britannica: Hospitality Industry
• CoStar: Majority Shareholder’s Second Attempt
• Google Search: Frasers Hospitality Trust