The offer represents a 6.8% premium to the unit’s last closing price. — Reuters
Singapore: Thai business magnate Charoen Sirivadhanabhakdi’s Frasers Property has made a second attempt to take over its hospitality real estate investment trust (REIT) at a valuation of S$1.37bil or about US$1.1bil.
The parent company has offered S$0.71 each for every share it does not already own to shareholders of Frasers Hospitality Trust, according to a joint statement yesterday.
The offer represents a 6.8% premium to the unit’s last closing price.
The Singapore-based developer made a buyout attempt in 2022, offering S$0.70 per share but failed to get the required 75% shareholder support.
The billionaire and his family together control more than 60% of the REIT’s shares through TCC Group, according to data compiled by LSEG.
It will abstain from the take-private vote, which if successful will lead to the REIT being delisted as soon as September.
Shares of Frasers Hospitality jumped 3.8% to S$0.69 yesterday after the trading suspension was lifted. Frasers Property climbed 1.2%.
Singapore’s REIT sector has faced worries since the Covid-19 pandemic due to issues over rising interest rates, macroeconomic uncertainties and a weaker foreign exchange rate against the local dollar.
“Hospitality trusts are inherently exposed to more business volatility due to shorter stays and periodic capital expenditure for asset enhancement initiatives,” the companies said.
Despite a recovery in tourism numbers, inflation and a strong Singapore dollar have hit the REIT’s profits from abroad.
The trust’s small float is also failing to attract institutional investors.
Frasers Property also added that the REIT would remain constrained by both macroeconomic challenges and structural limitations, potentially hindering its ability to grow distributions per security and net asset value.
A delisting would add to a wave of privatisations in Singapore amid concerns about limited liquidity in the broader listed property industry, dealing a further blow to attempts to revamp the city-state’s ailing stock market.
The REIT, which debuted on the Singapore Exchange in 2014, manages a portfolio of 14 hospitality assets – including hotels and serviced residences – across nine cities in Asia, Australia, and Europe. — Reuters
