Frasers Property headquarters in Singapore
Majority shareholders of Frasers Property are studying potential capital raising scenarios across the company’s entire portfolio as part of a holistic strategic review, market sources confirmed to Mingtiandi.
Controlled by Thai billionaire Charoen Sirivadhanabhakdi, the Singapore-listed property developer and investor could sell some of its assets or the company outright as part of the review, according to a Wall Street Journal report on Wednesday citing people familiar with the situation.
“We do not comment on market speculation or rumours,” a Frasers Property spokesperson told Mingtiandi in response to queries regarding the review. TCC Assets and ThaiBev, two Sirivadhanabhakdi-controlled companies that collectively hold 87 percent of Frasers Property shares, had not responded to Mingtiandi inquiries by the time of publication.
Frasers is taking a look at its corporate performance as its stock hovers near all-time lows despite growing its property assets by 190 percent and revenue by 92 percent since its listing ten years ago. In its financial year ending September, the company grew its property assets and revenue both by 2 percent on a year-on-year basis.
Fair Value Losses
Sources in the Wall Street Journal report indicated that the review is in its initial stages and there is no assurance of any outcome.
Frasers, which has operations in over 20 countries and counts Singapore, Australia, and Europe/UK as its three largest markets, reported a 81 percent decline in attributable net profit to S$173 million for the fiscal year ending September 2023, largely due to S$446 million of fair value losses on business parks in the UK and industrial assets in Australia and Europe.
Charoen Sirivadhanabhakdi, chairman of of Frasers Property
The markdowns, which swung the company into the red with an attributable net loss of S$53 million in the second half of the fiscal year ending September, were attributed to significant portfolio yield expansion on the back of higher capitalisation rates and a high interest rate environment, as well as softer leasing demand for its UK business parks due to the post-pandemic work-from-home office trend.
Industrial and logistics represented the company’s largest sector by total assets under management, accounting for 28 percent of its S$48.6 billion portfolio as of September, followed by retail, commercial and business parks, residential, and hospitality.
With its share price having lost 46 percent of its value within the last five years, despite the expansion of its balance sheet, a senior banking source told Mingtiandi that Frasers could have been approached by investment bankers to explore a restructuring to achieve an asset-light business model.
By privatising its development operations and spinning off its fund management business under a separate listing, similar to CapitaLand’s $15.9 billion restructuring in 2021, the company could potentially boost its share price.
Before the beginning of a global real estate slowdown in mid-2022, Capitaland had seen its stock climb 20 percent following its relisting in September 2021. The company’s shares now trade for around 7 percent below their IPO price.
In May last year, CapitaLand’s Temasek Holdings stablemate Keppel Corp (now Keppel Ltd), announced its own plan to transform itself into a fund manager. Since Keppel’s 2023 announcement, its stock has climbed 11.4 percent and closed on Thursday at S$6.9 per share.
The company’s net debt to equity ratio stood at 75.8 percent as of September, up from 64.8 percent a year earlier, while its net interest cover declined to 3x from 4x in the previous year.
Full Year of Deals
Despite the strategic review, Frasers has launched a string of acquisitions and projects in 2023.
In its home market of Singapore, the company was part of a City Developments Ltd-led consortium that submitted a winning bid of S$968 million in a tender for a 1.57 hectare private housing project. Earlier in the year, Frasers and its Frasers Centrepoint Trust REIT teamed up to acquire a 50 percent stake in the NEX mall from Mercatus Co-operative Ltd for S$652.5 million ($497 million).
In Australia, which stand as the company’s second largest market, the developer purchased an unfinished housing project near Melbourne from troubled Chinese developer Country Garden for a reported A$250 million ($158 million) in October.
In China, the company established a joint venture with Manhattan-based Tishman Speyer to acquire a 325-unit set of rental apartments in Shenzhen’s Luohu district to be branded and managed under Frasers Hospitality. In that same announcement, Frasers unveiled a joint venture with Tokyo-based investment manager Alyssa Partners to acquire a 124-unit rental apartment asset in Osaka.
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