Fraser Hospitality Trust to raise $266m in rights issue

Proceeds will be used to acquire a hotel in Australia.

With its goal to acquire its first hotel in Melbourne, Australia, Frasers Hospitality Trust plans to sell new units to existing unit holders to raise $$266.3 million in gross proceeds.

In a statement, the group said it is currently undertaking a rights issue to fund the acquisition of hotel Novotel Melbourne on Collins plus 72 car park lots for a total consideration of $245.4 million (A$237m).

The group will issue 441.5 million new stapled securities at 60.3 Singapore cents per unit.

According to the group, the rights issue is a pre-emptive measure to reduce its gearing and strengthen its balance sheet to create financial flexibility for future growth.

“With the rights issue, FHT expects its gearing to reduce from 38.3% to 34.1% and its free float to increase from $431.2 million to $536.5 million,” the group said.

With the acquisition of the Novotel Melbourne on Collins, FHT’s global portfolio of hotels and
serviced residences will increase to 15 properties while its portfolio size will grow from S$2.1 billion to S$2.3 billion on a pro forma basis.