Frasers Property proposes S$2.1 billion restructuring of hospitality portfolio

[SINGAPORE] Real estate giant Frasers Property is proposing a S$2.1 billion optimisation of its Frasers Hospitality Trust (FHT) portfolio, marking the next stage of its hospitality strategy following the trust’s privatisation last year.

“The proposed transaction is expected to reshape the group’s hospitality portfolio, enhance capital efficiency and deliver long-term shareholder value,” said the mainboard-listed group on Thursday (Jun 25).

The restructuring will reverse certain legacy arrangements previously put in place for FHT’s listing. These include the removal of minimum fixed rental and corporate guarantee obligations by Frasers Property.

The restructure will also bring FHT’s carved-out lease and reversionary interests under a single title ownership, simplifying its ownership structure.

Doing so will give Frasers Property the flexibility to maximise the value of FHT’s assets and scale its hospitality platform.

Additionally, the restructuring will allow FHT to stay invested in selected assets that offer opportunities for future value creation alongside TCC Group Investments (TCCGI), the parent company of Frasers Property and the existing co-owner of the FHT portfolio assets. TCCGI is controlled by Thai billionaire Charoen Sirivadhanabhakdi and his family.

Broadly, the optimisation will see FHT’s assets separated into four groups:

• Stabilised assets, which refer to mature assets with lower yield. Frasers Property will divest all assets in this group. Doing so will let the property group unlock capital from stabilised assets. At the same time, it can continue managing those assets for third-party investors and earn recurring fee income.
• Assets with the potential to achieve higher yield through value-enhancement initiatives.
• Non-core assets, which will continue to be held under FHT for future opportunistic divestment.
• Asset for potential redevelopment, which will be divested to Frasers Property to enable any potential redevelopment. This means that Frasers Property can consolidate full ownership of Fraser Suites Singapore, facilitating a potential redevelopment of the Valley Point site.

The deal will be transacted with TCCGI at about a 6.7 per cent premium to the latest independent valuation conducted on Apr 30.

It is also 1.6 per cent above the implied take-private price of S$0.71 per stapled security.

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Frasers Property said: “As TCCGI is the existing co-owner of the FHT portfolio assets, this provides strong execution certainty on the required terms.”

Loo Choo Leong, the group chief financial officer of Frasers Property, added: “We have been disciplined in improving capital efficiency, lowering gearing and enhancing returns for the group… (Optimisation) frees up capital for higher-returns opportunities while maintaining our recurring income base by co-investing alongside our capital partner.”

Following the deal, Fraser Property’s on-balance sheet hospitality assets are expected to decrease from around S$3.7 billion to S$2.5 billion. Its assets under management will be maintained at S$4.2 billion.

The group will continue to generate recurring income through its operating capabilities across the portfolio.

On a pro forma FY2025 basis, the group expects earnings per share to rise 3.4 per cent, net asset value per share to increase 1.3 per cent and net gearing to fall by 3.3 percentage points following the completion of the transaction.

The proposed portfolio optimisation remains subject to shareholder approval and other conditions, with completion expected before the end of FY2026 if approved.

Shares of Frasers Property ended flat at S$1.07 on Wednesday.