According to the offer document, FHT faced obstacles in growing its distributions per stapled security (DPS) and NAV. This is despite yield accretive acquisitions and AEIs to enhance the properties. The strengthening Singapore dollar against FHT’s operational currencies offset gains made by FHT’s operational currencies.
Meanwhile rising interest rates are expected to lead to higher costs of capital. On the other hand, any further strengthening of the Singapore dollar could potentially limit any potential NAV and DPS growth from a Covid recovery.
Furthermore, FHT’s small size has limited its ability to reap the benefits of a continued listing. FHT is smaller in scale relative to its S-REIT peers in a market where size is essential to liquidity and substantive growth. Without sufficient scale, FHT has not been included in major stock market indices and has been limited in its flexibility in undertaking asset acquisitions for growth, FHT’s offer document points out.
Agreeing, ISS says “given the proposed transaction would provide an assurance of value for stapled security holders and allow them to realise their investments in the trust at a premium, a vote for the proposed privatisation is warranted.”
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Similarly, Glass Lewis has advised fund managers to vote for amendments to the trust deed and the scheme.
