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SINGAPORE: Frasers Property is proposing a restructuring of its hospitality portfolio involving about S$2.1 billion (US$1.6 billion) of assets.<\/p>\n
The multinational real estate company is looking to sell its 63.28 per cent stake in five of its properties to TCC Group Investments Limited (TCCGI), the existing co-owner of Frasers Hospitality Trust\u2019s (FHT) portfolio, Frasers Property announced on Thursday (Jun 25).<\/p>\n
TCCGI, a Thai investment and holding company, currently owns a 36.72 per cent stake in Frasers Hospitality Trust.<\/p>\n
The five hotels are \u201cstabilised\u201d assets with lower yield and a total value of S$1.1 billion.<\/p>\n
They are: Frasers House in Singapore, The Westin Kuala Lumpur in Malaysia, Fraser Suites Queens Gate London and Fraser Suites Edinburgh in the UK, and ANA Crowne Plaza Kobe with Koto No Hako in Japan.<\/p>\n
The group\u2019s hospitality portfolio would also be further categorised: four properties have been categorised as assets with potential, valued at S$0.4 billion.<\/p>\n
These properties \u2013 Novotel Sydney Darling Square and Fraser Suites Sydney in Australia, and Capri by Fraser Kensington and ibis Styles London in the UK \u2013 have the potential to achieve higher yield.<\/p>\n
Following the proposed portfolio restructuring, Frasers Property will continue to retain an effective 49.95 per cent exposure to these assets, while TCCGI will hold 50.05 per cent.<\/p>\n
Four other properties across Australia, Germany and the UK, valued at S$0.3 billion, are categorised as non-core assets, to be held for future “opportunistic divestment”.<\/p>\n
They are: Novotel Melbourne on Collins in Australia, Maritim Hotel Dresden in Germany, Fraser Place Canary Wharf and Fraser Suites Glasgow in the UK.<\/p>\n
Following the transaction, Frasers Property will continue to earn asset management fees from the stabilised assets, assets with potential and the non-core assets.<\/p>\n
Fraser Suites Singapore is classified as an asset for potential redevelopment.<\/p>\n
The asset is valued at S$0.3 billion, and will be 100 per cent owned by Frasers to enable any potential redevelopment of the whole site on which the development known as Valley Point is located.<\/p>\n
Frasers Property said the move builds on the 2025 privatisation of Frasers Hospitality Trust, which gave the group greater flexibility over any restructuring of the ownership and management of the portfolio.<\/p>\n
The proposed transaction is expected to \u201cenhance capital efficiency and deliver long-term shareholder value\u201d, the group said in a press release. \u00a0<\/p>\n
It added that the optimisation of the portfolio will secure an \u201cattractive, above-valuation pricing\u201d for Frasers Property shareholders.\u00a0<\/p>\n
Group chief financial officer of Frasers Property Loo Choo Leong said the proposed portfolio optimisation frees up capital for higher-return opportunities while maintaining a recurring income base by co-investing alongside its capital partner.<\/p>\n
\u201cThis delivers clear positive effects on our balance sheet and key financial metrics,\u201d he said.<\/p>\n
Responding to questions from the media on whether an open market bid was explored, Mr Kelvin Tan, head of real estate mergers and acquisitions at DBS Bank and the financial adviser to Frasers Property, said none of the parties approached expressed interest in the portfolio.\u00a0<\/p>\n
Some reasons were that the third parties felt that pricing was on the “full side” and that they were not interested in Frasers Property continuing to manage the assets, he said.\u00a0<\/p>\n
TCCGI represented the \u201cbest available pricing outcome\u201d for shareholders, he added.<\/p>\n
\u201cTCCGI is the largest shareholder of FPL (Frasers Property Limited), so whatever benefits accrue to FPL also accrue similarly to TCCGI,\u201d he said.<\/p>\n<\/div>\n
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