SINGAPORE -Singapore-listed Frasers Property Ltd, part of Thai tycoon Charoen Sirivadhanabhakdi’s TCC Group, proposes to take unit Frasers Hospitality Trust private in a deal that values it at S$1.35 billion ($970 million).
The proposed transaction is part of a consolidation trend seen in Singapore-listed real estate investment trusts (REITs).
Frasers Property and related parties (FPL Group) are offering S$0.70 cash for each of the shares in the REIT that they do not already own, the target and intending buyers said in a joint statement on Monday.
The group and related parties own about 63% of the trust.
The price is 6.1% above the last closing price for Frasers Hospitality Trust.
“Hospitality remains one of our core businesses. This transaction will allow FPL Group to increase its investment in hospitality assets at locations that we are already familiar with,” said Loo Choo Leong, FPL’s group chief financial officer.
The REIT has a S$2 billion property portfolio that includes hotels and serviced residences across Asia, Australia and Europe. It has been seeking to improve its valuations in a challenging market and had considered many options.
The companies highlighted Fraser Hospitality Trust’s small size versus its peers in a market where scale and size were essential to liquidity and growth as among the challenges for the trust’s continued listing.
Another challenge was the hospitality sector’s muted growth in the markets where the REIT operates and the strengthening of the Singapore dollar against the firm’s operational currencies, the companies said.
Company executives expect the deal to be completed by the fourth quarter, subject to shareholders’ approval.
DBS is the financial adviser to Frasers Hospitality Trust’s managers on the deal. BofA Securities is the lead financial adviser to FPL, and Oversea-Chinese Banking Corp is the financial adviser.
($1 = 1.3911 Singapore dollars)
(Reporting by Anshuman Daga and Harshita Swaminathan; Editing by Bradley Perrett)