Frasers Property’s (FPL) proposal to take Frasers Hospitality Trust (FHT) private through a trust scheme of arrangement offers existing FHT unitholders an opportunity to unlock value, says CGS-CIMB Research analyst Lock Mun Yee.
This is as the scheme consideration is at a premium to its book value, she adds. Lock notes that the scheme consideration of 70 cents per unit implies 1.07x P/NAV, representing a 43.8%-48.5% premium over FHT’s one-, three-, six- and 12-month volume-weighted average price (VWAP).
“The transaction is in line with FPL’s long-term strategy of leveraging on its synergistic multi asset class capabilities to create value, with hospitality remaining one of its core businesses. It will also allow FPL to increase its investment in hospitality assets and to leverage on its deep understanding of FHT’s assets and adopt a disciplined approach to drive performance,” says Lock.