SINGAPORE: Frasers Property is proposing a restructuring of its hospitality portfolio involving about S$2.1 billion (US$1.6 billion) of assets.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’s (FHT) portfolio, Frasers Property announced on Thursday (Jun 25).TCCGI, a Thai investment and holding company, currently owns a 36.72 per cent stake in Frasers Hospitality Trust.The five hotels are “stabilised” assets with lower yield and a total value of S$1.1 billion.
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.The group’s hospitality portfolio would also be further categorised: four properties have been categorised as assets with potential, valued at S$0.4 billion.These properties – Novotel Sydney Darling Square and Fraser Suites Sydney in Australia, and Capri by Fraser Kensington and ibis Styles London in the UK – have the potential to achieve higher yield.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.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".They are: Novotel Melbourne on Collins in Australia, Maritim Hotel Dresden in Germany, Fraser Place Canary Wharf and Fraser Suites Glasgow in the UK.Following the transaction, Frasers Property will continue to earn asset management fees from the stabilised assets, assets with potential and the non-core assets.Fraser Suites Singapore is classified as an asset for potential redevelopment.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.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.The proposed transaction is expected to “enhance capital efficiency and deliver long-term shareholder value”, the group said in a press release. It added that the optimisation of the portfolio will secure an “attractive, above-valuation pricing” for Frasers Property shareholders. 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.“This delivers clear positive effects on our balance sheet and key financial metrics,” he said.Responding to questions from the media, Mr Loo said that hospitality remains an integral and core part of Frasers Property. "We're not shifting our eyes away from it. In fact, we are increasing our focus on ensuring that we deliver quality hospitality products and services to our customers," he said. He added that the move is a capital structure transaction that will lighten their balance sheet. The portfolio changes would decrease Frasers Property's on-balance sheet hospitality assets from about S$3.7 billion to S$2.5 billion, while maintaining its assets under management (AUM) at S$4.2 billion. AUM represents the total market value of investments or assets that are managed. Frasers Property will also continue to generate recurring income through its operating capabilities across the portfolio, and enable it to pursue potential redevelopment of the entire Valley Point site, the company said. The proposed changes to the portfolio are subject to 50 per cent approval by shareholders entitled to vote at an upcoming extraordinary general meeting (EGM). If approved, the changes are expected to be completed before the end of this financial year.
