In the pink of REIT: F&N eyes listing of hospitality REIT via property-bundling

6 serviced residences will prep them up for it.

F&N is making it to the headlines again with its proposed listing of a hospitality REIT under Frasers Hospitality Trust. They are likely to nail it, as the bundling of 6 of its serviced residence properties is under way.

According to OSK DMG, since Chareon Sirivadhanabhakdi’s successful takeover of F&N in early 2013, the group has embarked on several initiatives that unlocked value for the entire group. 

Here's more from OSK DMG:

This includes two rounds of capital distribution amounting to SGD5.3bn, or SGD3.80/share, which returned substantially all of the proceeds from the sale of the group’s interest in Asia Pacific Breweries.

F&N also executed on its long-awaited plans to separate out the property business from its food and beverage business, through the listing by introduction of Frasers Centrepoint Limited (FCL).

FCL’s latest initiative is the proposed listing of a hospitality REIT, Frasers Hospitality Trust (FHT), through the bundling of six of its serviced residence properties with TCC’s hotels in the region.

FHT, which will have initial assets of cSGD1.5bn, is buying six serviced residences from FCL at a consideration of SGD650m, The move will bolster FCL’s balance sheet and build on its stream of recurring, fee-based income through management fees, as well as provide an additional platform for the group to recycle capital.

The move triggered a 20% run in FCL’s stock price in the past month. FCL’s other REITs are also doing well. Fraser Centrepoint Trust, its retail REIT, recently announced the acquisition of Changi City Point, bringing its mall portfolio to six properties.

Changi City Point, which is entering its second leasing cycle, will provide FCT with potential for DPU growth through higher rental rates as well as diversify its geographic spread.

We are most excited about Fraser Commercial Trust (FCOT), the group’s office/business park REIT, which will see strong pickup in rental income once the master lease at Alexandra Technopark expires in August and allow the group to enjoy market rents that are almost double of that under the master lease.