# Frasers Hospitality Trust — 2025 Results Dialogue Webinar Presentation & Unitholder Q&A

Event: SIAS Dialogue with Frasers Hospitality Trust — Management Presentation & Q&A
Date: 5 August 2025
Issuer: Frasers Hospitality Trust (SGX:ACV)
Provenance: automated speech recognition (asr) of the public webinar recording
Source recording: https://www.youtube.com/watch?v=QER_DvfsNps
Official record: https://www.frasersproperty.com/reits/fht/investor-relations
Presenters: Mr. Eric Teng — Chief Executive Officer, Frasers Hospitality Asset Management Pte Ltd
Words: ~9,425

Unofficial machine transcript. Prepared by SMID Research from the public Dialogue webinar recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. There is no speaker attribution: the source recording carries no diarisation, so cues are shown as timestamp and text only; timestamps refer to the recording. Not a company publication. Frasers Hospitality Trust's own investor relations page (https://www.frasersproperty.com/reits/fht/investor-relations) is the authoritative record. Copyright in the briefing rests with Frasers Hospitality Trust / SIAS; contact contact@smidresearch.com for corrections or removal.

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[00:00:09] Okay, good evening. Sia's members saying you need holders, staples, security holders of Fraser's Hospitality. Thank you for coming. We have a number of you registered to attend today. I see maybe some are still on the way. You are here because you want to make an informed decision. The light is shining on my eyes, you know. You want to make an informed decision and you want to ask questions. You want to know why you only get once and more. You call my office and you keep asking me, why is there only one cent more? So there's a reason for it and there are reasons I suppose they will have,

[00:00:51] but you need to be satisfied. The reason why we do these sessions is for you to get a better understanding of the issues and to ask the horse, or the horses today, we have two of them here. We have Mr. Eric Ghan, CEO of FHT, as well as Mr. Chang, Tao Chen, who is non-executive and independent director of FHT. Please welcome them. So thank you gentlemen for being with us today. You ready for all the grilling? Yeah, definitely. Good, good. You know all the facts and you know all the reasons. So we will kick off the sessions with a short presentation by Eric on the overview and rationale of this transaction.

[00:01:38] So hold your horses, keep your questions. After he finishes, I have some questions to ask him, which is the majority of you asking. Then any more questions, please ask. We will have enough time for that. So over to you, Eric. Thank you, David. A very good evening to everybody. I'll quickly run through the presentation that we have. In fact, we have published this in the SGXNAN. To begin with, firstly, a little disclaimer note, whatever that we are disclosing here. Firstly, I'll start off with the transaction overview. Obviously, in this whole privatization, it's actually a scheme of arrangement. The offeror is actually a subsidiary of the sponsor,

[00:02:20] which is Phrazer's Property Limited. The transaction structure is in such a way that, you know, it's going, FPL being the offeror, is going to acquire all the staple securities in FHT. And of course, there are some exceptions to it, which is the excluded staple securities. These staple security holders are typically basically just FPL themselves and TCC, which are concert parties. And over here is actually a scheme of arrangement. This whole privatization is through a scheme of arrangement, which is in accordance with the Singapore Code of Takeovers and Mergers. And in terms of the consideration, the privatization, the offer on the table is actually suddenly one cent

[00:02:59] per staple security, and it's entirely in cash. Now, of course, if you read the documents here, the slide here, the offeror reserves is right to adjust the scheme consideration to the extent that there's excess distribution that has been made on the permitted distribution. So what do we mean by that, actually? Permitted distributions means in the ordinary cost of business, we will continue to pay distributions on the business as usual basis. So because our financial year starts from 1st October 2024 for this year, 2024 last year, to 30th September this year, and of course, we have already paid off the first half distribution on 27 June.

[00:03:39] We paid 1.025 cents. You will have received it already. Now, of course, by the time the scheme takes effect, assuming the scheme goes through on 15 August, we have a scheme meeting. We look forward to your participation, and assuming at the scheme meeting, it's a proof that the scheme goes through, then the 71 cents will be paid sometime around 3rd September. And on top of that, there's also a distribution on cleanup distribution, and that's what we call the permitted distribution as part of it, that we will pay up to the effective date. Tentatively, we are looking at effective date around 22nd September or so, and the cleanup distribution

[00:04:17] will be paid sometime in 2nd or 3rd of October. So there will be two payments for your information, if the scheme goes through, only if the scheme goes through. You get your 71 cents, and you get your cleanup distribution. So, but of course, in the event that there's assessed payment in terms of permitted distribution, then what we are saying here is that the offeror receives the right to do the adjustment, okay? But it's rather unusual to have that. Over the years that we have been paying distribution, we have not come across where we made, you know, an error like that, I would say. Now, the other key thing that I want to bring to your attention

[00:04:49] is usually the key approvals required for this scheme meeting or this whole prioritization to go through. Number one, we have a scheme meeting on 15 August, and of course, we need the state-first security holders to actually approve the scheme. That's the starting point. The other regulatory approvals that we have are also called approval, as well as, you know, Australian federal approval, foreign investment review approval as well. Next, I will quickly go through the strategic review that we have undertaken. In a little context, FHD was listed in 2014, and with the idea of having a very well-diversified portfolio to provide stable growing income DPS and growth in DPS and NAV,

[00:05:34] we started off very well, I would say. In the initial years, the DPS that were paid were decent. It was really good. But since then, as you would have known, right, there have been a change in macroeconomic environment. The situation that we had enjoyed before, like, you know, low interest reminders were all over. In fact, since then, we have experienced Brexit, we have experienced COVID, and moreover, you know, the strength of Singapore dollars, in other words, the bigger foreign currencies against Singapore dollars, has actually impacted our performance as well. Because of a diversified portfolio that we have in overseas, right, whatever income that we have,

[00:06:13] we have to bring back to Singapore to make a distribution to you. And when we convert that from foreign currency to Singapore dollars, we actually convert it less because of the strength of Singapore dollars or witness of the foreign currency. So this is something that's really macro, that is beyond our control. As much as we could do hedging, there's only so much we could hedge, in a sense. The other thing that really impacted us was really the higher interest rate environment, and that impacted the distribution as well. So because of that situation, and right after pandemic, in fact, you know, pandemic had decimated the hospital industry,

[00:06:44] the hospital industry, the most, in fact, across all asset classes. And as you recall, back in 2022, we did put forth a scheme of arrangements, something similar to what we have proposal here as well. Back then in 2022, we actually put forward a scheme at 70 cents per staple security. Also in cash, the only difference is really the price, like David mentioned earlier, it's previously 70, now it's 71 cents. The reason why we have done that is really, over the years we realised that it has been very challenging for us to grow FHD to a minimum full scale and minimum fully grow the DPS and NAB.

[00:07:22] I think that's the main objective of why we existed in the first place. And we found that there were a lot of challenges that we faced structurally in terms of industry, in terms of our scale and everything else, which I'll share shortly. Because for all the challenges, we felt that it was actually better for us to do our prioritising. That was also true of strategic review that we had undertaken back then. And of course, it didn't go through, unfortunately, right? It didn't carry through. And what happened then is that the situation in fact has gone worse, the macro economy has gone worse from then, 2022.

[00:07:54] We have operated for almost three years since then, since 2022. And for the last three years, you can see from the DPS that we have been paying out to you, the NAB, it hasn't moved much, in fact, it hasn't been able to grow back to the pre-pandemic level. Why is that so? There are many reasons which I'll share shortly as well. And of course, given the situation, the challenges that we face, we have again undertaken a new strategic review. In fact, this time round, we have a new board of directors, four out of six directors are new independent directors. The previous board has actually retired after they have suffered a full nine years.

[00:08:29] So with the new board as well, we have undertaken a strategic review. We have appointed financial advisors, two financial advisors, in fact, DPS and UOB, to advise us on how best to unlock value. But before I go into the details of how we have done it, I want to quickly cover some of the key pertinent points that you need to understand. A lot of questions have been raised, you know, room rates have gone up, revenue has gone up, why has DPS not gone up? And truth be told, in this slide itself, we want to share with you as well that if you look at the rates that we have,

[00:09:02] at the bottom right here, with all the flags that you can see, we have operations in six countries, right? And of course, we didn't show Germany because it's one property that is just getting rental. We don't show that statistics because of confidentiality agreement that we have. But if you look at all the countries that we have here, we have all surpassed pre-COVID, surpassed FY19 before pandemic. You look at Singapore, we were up 5.3%, Australia 4.4%, UK 12.4%, Japan marginally, and Malaysia in fact 34.3% up in terms of revenue. But having said that, it didn't translate to a higher DPS unfortunately. Why is that so? Because of inflationary cost pressure.

[00:09:50] We have all experienced it, there's higher labour costs, there's higher energy costs, and on top of that, the currency has actually gone south as well. The foreign currencies that we have operations in, unfortunately, they have weakened against Singapore dollars. The strength of Singapore dollars has not worked in our favour in this case. Because we are trying to bring foreign income for distribution, we actually convert to a lesser, a lower amount in Singapore dollars to be distributed. And that's one of the key problems that we face. The other key thing is really, if you look at interest rate environment, it has gone up quite significantly in the last few years.

[00:10:23] We are now paying about 3.6%. Back in FY19, we were only paying about 2.5%. So, 100 basis points is a bit higher. And that has eaten into our distribution income. The other key thing that you really need to understand here is that, as well, if you look at COVID-19, it has a lasting impact on us, in fact, a negative impact, I would say. If you look at the bottom table itself, prior to COVID, we were already trading at a discount to NAB at 0.95 times. During COVID, we were trading at 0.7%. So, it went worse in a sense. But first, post-COVID, we have not changed much as well.

[00:11:01] We are still trading at a deep discount, in a sense. Likewise, if you look at the share performance, our trading price, we are actually lagging behind some of our peers as well when we compare. One of the main reasons is because we are not in the index. We don't qualify for a non-read index, whereas our peers, all of them are in the index, unfortunately. And the other key thing in the next slide, I also want to share with you, if you look at the forecast here, there are some projections that we have. If you look at statistics here, all the segments that we look at

[00:11:34] is actually forecast for 2020-25, it's not any better than previous years, with the exception of Australia, which is Australia, where we have... Australia only accounts for about 20% of our portfolio. And if you have seen our recent announcement, the quarter business update, you can see that although Australia supposedly performing better, it's not truly the case because we were running flat if we look at the quarter results in terms of REFPA. And on the right, you can see that there's this economic uncertainty index. It is true right now. We are at the height of uncertainty. There are so many things that are very uncertain in terms of policies, in terms of economic outlook.

[00:12:10] There's war going on, there's tariff war and everything else. So all this creates a lot of uncertainties in our operating environment. And of course, the next thing that I want to highlight, which I mentioned earlier, was really about the interest rate environment. If you look on the graph on the left itself, you can see that interest rate has negatively impacted the hospitality sector the most. In fact, if you look across all the asset classes, specialized asset classes were not impacted so much. In fact, they were not impacted. But the hospital is at the right or bottom at 61%. The industry itself is very volatile, right,

[00:12:48] compared to all the other asset classes, where weighted average release is actually much shorter compared to other people in that sense. And of course, if you look at the fat rates itself, it has heightened, in fact, and it has stayed higher for longer. You can see in these projections, these are actually from third party projections. This is not from us. I will cover this slide in more details in the following slides in terms of asset class, scale and geography. Firstly, in terms of asset class, as the industry itself, hospitality industry itself, if you look at it, again, if you look at the graph on the left,

[00:13:23] hospitality industry itself, we are always lagging behind the other specialized, or even industrial or commercial rates in a sense. We don't trade as well in a sense, because investors generally, at least from what we understand, investors generally prefer defensive play, stability of income and things like that. Whereas in a hospital, we are very volatile, because our room rates are on a daily basis. And as a result, the revenue is more volatile compared to a fixed list, extended list in a sense. So it is what it is. I think investors have their own preferences, but truth be told, if you look at the statistics here, you can see the hospital is not trading as well

[00:14:01] as our other asset classes. The other thing is that if you look at the annualized total return, to begin with, this is total return that we compute from our IPO, which was 14 July 2014 until, in fact, 22nd April, which was the last untruth trading price before we did the announcement about the strategic review. You can see that, in fact, across all the asset classes, specialized rates, in fact, trades the best. Total return is the highest, at 16.97%. Hospital, as an industry itself, is trading at only 3.21%, across all the asset classes, that's one. The other point that you need to take note is that

[00:14:40] during COVID itself, it further compounded the issue. If you look at the other asset classes, they have reduced to, like us, like HOPSPY, but they didn't reduce as much. If you look at our number, from 3.21 drop to 0.8 or 0.79, we have decreased four times. Whereas if you look at specialized rates, they only decreased about 1.7 times. So the magnitude of decrease has actually magnified, in a sense. The other thing that I want to talk about is really scale. This is more about us in terms of FHT. We actually have the smallest asset class. Our scale is the smallest. We have a total asset of 2.1 billion.

[00:15:18] Compared against our peers, class is four times bigger than us. And of course, in terms of gearing, we hold a pretty good leverage ratio at 35%. But having said that, because of the size of the asset that we have, the overall debt hit room that we have is the smallest, at 641 million, based on 50% leverage. But we don't go to 50% because that's the regulatory limit. But typically, when we look at 40%, because we always wanted a buffer in case things may go south against us, we needed some buffer. If we look at 40%, we only have a debt hit room of 187 million,

[00:15:58] which is not great, not sufficient for us to grow inorganically. So it has been a challenge for us in terms of growth. And in terms of geography, which is a third thing that I want to talk about, diversification is great because it helps when it's a risky situation, if you have diversification, it's great. But it's double its sword in a sense. But in this case, if you look at the countries that we have operations in, unfortunately, all the investments that we have in the countries that we have invested in, the foreign currencies have actually depreciated against Singapore. You can see on the graph itself, on the left itself,

[00:16:35] over the years from IPO until now, all the currencies have depreciated against Singapore dollars. The strength of Singapore dollars has impacted us. To give you an illustration, if you look at the table, the bar chart on the right, at our IPO or asset value, we are about close to $2 billion in terms of the asset. In terms of valuation in local currencies, it has actually gone up by 282 million, meaning we say the assets are actually doing well. The valuation has gone up. But unfortunately, when we translate it back into Singapore dollars, because it's the foreign currency, we translate it back. The forex has actually taken more than the additions and the valuation upside that we had.

[00:17:17] It's 319 versus 282. As a result of that, our overall NEB has actually come down to about close to $2 billion, 1.961. So that gives you a magnitude, some illustration, that although we are performing well in terms of property level, but macroeconomic situation, the interest rate and forex have actually taken all the gains that we have gained, in a sense. Now, because of all these challenges that we have faced, quite clearly, the last three years especially, we went back to business as usual since the last scheme meeting. We continued to work on how best to grow, meaningfully. As I mentioned earlier, the DPS and NEB hasn't been able to grow meaningfully, unfortunately,

[00:18:01] despite all the efforts they were put in. We were swimming against the current, I would say. And because of that, we have taken a strategic review again. And of course, the FAs have also assisted us to say that, well, to really address the issue, there are three criteria that we look at. Addressing the structural constraints that I mentioned earlier, how best to unlock potential value, and speed and certainty, and the execution of it, how fast we can get things done. Of course, the financial advisors have actually conducted a review, and essentially, there are two buckets here. There are two ways to look at it, and there are two buckets here.

[00:18:39] On the left itself, we can continue business as usual. FHD remains listed. That's one option. We can continue as it is. The second option is, of course, there are a lot of other options that we have there, which is SAO FHD. Now, coming back to the first bucket first, which is if we continue to be listed. So, what are the things that we could do? Of course, we can continue to do our own assets through asset enhancement initiatives, continue to optimise new management to improve our yield, cost rationalisation. And of course, we can also divest our assets and recycle capital into higher yielding assets. These are all the things, the plans that we have, but it's not easy to execute, in a sense.

[00:19:21] It has been very challenging, because like I mentioned, all the other factors like FX, interest rate, they're all working against us, in a sense. And of course, we can also do a rebalance and a portfolio, right? But all this will take time. All we are saying is that if we continue business as usual, of course it can go on, but we can't expect growth, meaningful growth, in a sense. It's going to be very slow, very muted, in a sense. And there were a lot of uncertainties, like I have explained earlier. The index on uncertainties is at the highest. There are a lot more things that may impact us, which we do not even know right now.

[00:19:53] The other bucket, which is on the right, really, if you look at it, we can, of course, liquidate the assets and return capital, right? But that's not something that we take lightly, in a sense, because we can't be cherry-picking assets to sell off, and then leave the less desirable ones or less prominent ones with us, and then that will naturally kill the reed, in a sense, because we continue to release them, in a sense. Of course, the sale of platform, scaling up acquisitions through mergers, or even privatisation are the other options that we have considered. But you realise that, to put things in perspective and in context,

[00:20:27] FPL, as the sponsor, together with TCC, they jointly own 63%. So if we were to undertake any of these options itself, we will need their consent, definitely, because we will hold an EGM, they will have a right to work, except for privatisation. And in this case, that's why, in the scheme of arrangement, they recuse themselves or abstain from voting. But for all the other options that we have, if we were to go on a merger, we would talk about exchange ratio, we need their consent. And of course, what we have done is that we have actually, because of all these options, our independent directors have actually reached out to FPL

[00:21:01] to understand what is their intent in the first place, what do they have in mind. And of course, they said that, as announced, they did say that, you know, HOPSPE continues to be a core asset class, one of their core asset class, and they are willing to ride through various cycles, and that's what they say. They hold it long-term, in other words. And because of that, also, in fact, some of the underlying leases, the reversal interests are actually helped by them as well, from IPO days. So they hold the land, actually. But eventually, because at IPO, we have actually cut out 75 years for the REIT, and that's another 64 years.

[00:21:37] At the end of 64 years, in fact, the land goes back to FPL as well. So they actually hold a long-term strategic intent, in a sense. And because we want to unlock value to the unit holders, it's only very natural that we approach them, in that sense. And they have said very clearly, well, if you want to unlock value, and you're serious about, you know, exploring profitability, and we ask them whether they are keen, and they say, yeah, if you're keen, and then, you know, we started talking about the price. And of course, what happened then next is that we have to decide, of course, the board of directors have actually evaluated the whole situation

[00:22:09] and felt that the scheme of arrangement, through profitability through scheme of arrangement, is in fact the most viable option to unlock value, because of the three criteria that I mentioned earlier, right? Constraints that we have, how have we addressed it, how can we unlock value, and the speed and execution as well. So having considered all these factors, the independent directors, together with the assistance of the financial advisors, obviously have negotiated a deal with the sponsor. And the deal is that, you know, we have negotiated an 11.1% premium over NAB. And the scheme price is at 71 cents. And how does that come about, the 71 cents?

[00:22:50] We use the starting point of our half year results, which was the difference much. If you look at the column on the left, it's at 64.16 cents. That's our starting point, and that's what we have announced. We evaluated the property mark to market. In the sense, we brought up the value by 0.84 cents. And of course, what happened then is that there were borrowings that are packed to the properties. Some of them are in foreign currencies, obviously. We have to adjust for forex as well, just like the valuation as well. They are all translated into Singapore dollars. Likewise, we have also adjusted for the first half distribution

[00:23:26] that we made, 1.025 cents. Having considered all this, the revised NAB is actually at 63.9 cents. And we negotiated so hard at 71 cents. It was really a very outstanding deal, and I would say that it was a very painful exercise to negotiate. It was really tough. And of course, in terms of the other benchmark, when we compare against the other benchmark that we have, you can see that in terms of PNAF, whether it's one year, three year, five year, or a rich things IPO, it's much more attractive than what we used to trade, in a sense. And in terms of the other previous average precision privatisations,

[00:24:03] on average, it's only about 1.04 times. Here, we have a deal, a proposal for you to consider at 1.11. It is so much more superior and attractive, if you ask me. Compared to the average of the other weak peers, it's only at 0.82, it's 80% now. Now, of course, David mentioned earlier as well, last time in the 2002 scheme, it was at 7% premium. Even at 7% premium, it was already above the average of 1.04. This is, last time was 1.07, it was already much better in that sense. Very attractive in fact. This time now, it's even higher. We negotiated even higher at 11%. Truth be told, I think this is a very attractive value proposition

[00:24:49] for your consideration. And of course, the other thing that we looked at is really the volume-weighted average pricing. Across all the 1 month, 3 month, 6 month and 12 months, again, it's much higher at 71 cents. It's all at a premium, above 20% easily. And lastly, we also wanted to share this in terms of the scheme consideration at 71 cents. What does it mean for someone, for a loyal, Staple Security holder that has been with us since IPO? And assuming that the Staple Security holder has actually subscribed for the rights issue as well, that we have undertaken in 2016, it was at 60.3 cents, 32 for every 100.

[00:25:29] So the theoretical x-ray price is actually at 81.28, I would say, or 81.3 cents. And assuming you get a scheme consideration of 71 cents, plus all the distributions that you have received to date up to 22nd April at 32.9 cents, your total return since IPO would have been 27.8%. But of course, let's not forget, we have also just distributed the 1.025 cents on 27 June for the first half. If you were to include that in, it's about 29.3% closer to 30% total return since then. This is just a summary. Now, I think it's very important at this stage for, you know, the scheme dock has been sent out.

[00:26:10] I believe all Staple Security holders will have received your scheme dock as well as the proxy form. And in the scheme dock, you realise that the IFA, Independent Financial Advisor, which is Deloitte Stooge, and they have actually reviewed the proposal, the whole scheme, and they said the price of 71 cents is actually fair and reasonable. Moreover, they also advised FHD independent directors to recommend to the Staple Security holders to vote in favour of the scheme, because it's fair and reasonable. Likewise, FHD independent directors, taking the consideration that buys from the FAs, the IFAs, and not considering all the factors that the IFA has laid out in their letter,

[00:26:53] is also recommending to all Staple Security holders to vote in favour of the scheme. Okay, in terms of the scheme, I think it's very important for you to understand, on 15 August, the scheme meeting, there are two thresholds for it to be carried, to be approved, for the scheme to be approved. There's a Staple Security holding test, as well as a value test. We need at least more than 50% in numbers of Staple Security holders, that's number one. Number two, more than 75% to vote in favour. Right, so last round, in 2022, we actually garnered 74.88, we missed it by 0.12%. So this time round, hopefully investors are able

[00:27:37] to make an informed decision, look at the merits of the deal, and decide accordingly. Now, in terms of the scheme resolution, how do you vote? Of course, you can turn up in person. The meeting, like I mentioned earlier, is 15 August, it's at the Grand Ballroom, which is just next door, in fact, to this hotel. It starts at 10.30am. If you can attend, come for the meeting on 15 August, if you are unable to attend, please send in your proxy form as well. But the proxy form deadline is actually 72 hours before, which is on the 12th of August, at 10.30am. Proxy form must reach the registrar by then.

[00:28:15] So that's just a reminder to you. Now, there are two possibilities of the outcome of the scheme meeting. One is, of course, if a scheme goes through, that's great. You get 71 cents paid out, and a clean-up distribution eventually. The second outcome is, if the scheme doesn't go through, what does it mean? It means that it's business as usual. FHD will continue to be listed. We will continue to operate as it is. But of course, let's not forget, we will continue to go through the challenges I mentioned earlier. Of course, here's the proxy form. I want to take this opportunity to remind all Staple Security holders that there is a booth out there

[00:28:50] right now to collect proxy forms. If you decide to actually put in your form, there is a booth out there. Please feel free to approach our people out there. These are some of the other important information, which I mentioned earlier already. Now, in terms of timeline, today is 3 August. We have the dialogue. Great to see everybody to participate here. The launchment of your proxy form, like I mentioned earlier, 12 August by 10.30am. Please do not miss the timeline if you were to submit your proxy form. The meeting is going to take place, the actual meeting is going to take place 3 days later, which is on 15 August at 10.30am at the Grand Ballroom,

[00:29:26] which is next door to this venue. And the actual payout, some of the key timelines that I want to bring to your attention, if the scheme goes through and assuming court sanctions and all regulatory approvals were obtained, we could expect a 71 cents payout for every stable security on the 30th set. These are all indicative timelines, but on the 30th set. And then the cleanup distribution is likely to be sometime maybe 2nd or 3rd week of October. But the read will be deleted by around 6th October. Now, with that, I end my presentation. Thank you, David. Hearing you with so much of energy, it's a pity that we have to give up.

[00:30:13] You are a very, very involved CEO, Rick. What really, really is a scenario, I mean, you have given some indication of how bad the current situation is. You have the currency crisis, you have got Trump against you, the tariffs, and you've got the oil crisis. And all this will come, yes. But none of your peers are leaving you, leaving your sector. The peers are okay. And you said they are actually on the index. Yes, they are. So they are getting capital much better than you. Well, because they are in the index, typically they have a better following from institutional investors. Yeah, but these guys can give you money,

[00:30:55] you know, rights issue. How about that? Well, we can't be raising... No, no. Yeah, you can't be raising... Thank you for your support, I would say. For us to raise funds, first of all, we must have a really genuine reason for us to raise funds, assuming we are able to get a very new accretive acquisition. So, I believe what goes up, goes down, goes up, there are seasons, but they have all enjoyed your DPU in the past. But it's sad for them to, of course, they keep calling me saying, can you please help? Don't let it go down. Don't let it privatize. But how many of you like it privatized?

[00:31:36] So, you can see the same way. They like you the way you're running this place. Give them a clap, you know. So, but be realistic. One thing we must remember is that the world is becoming very, very quickly a different world, because the man in White House is turning everything upside down, and that would take a long time to recover. So, once you are about staying with him, remember that it's going to be a hard time. Every economist, the famous economist in the world, every time I listen to CNN, CNBC, Bloomberg, CNA, I get worried. So, if they are giving you this,

[00:32:32] you're paying two payments, right, in addition. That's right. Think about it very seriously and very carefully, because it may not be repeated. There's an opportunity for you to cash out. So, let me ask, were the independent directors unanimous in their recommendation to support the scheme? Yes, there are four independent directors on the board, and yes, we were unanimous in supporting the scheme, and we are unanimous in recommending to unit holders to accept the scheme and vote in favor of the scheme on the 15th of August. So, all were unanimous, sir? Yes. So, given the importance of the independent judgment in evaluating the proposed transaction, can you disclose whether any independent directors

[00:33:27] hold any units in a entity themselves and how that may or may not influence their recommendation? There are four independent directors, and none of our four independent directors hold any shares, any units in the stable securities. So, we are independent from a unit holding perspective, but we're also independent in our appointment. And, of course, we've had to pass that review by MES, qualifying us as independent directors. Yes. So, is the rationale of this privatization exercise the same as the previous one where the shareholder voted against? After all, it's only a cent more, right? So, they're saying, so, if it's only a cent more, how was the 71 cent offer negotiated,

[00:34:22] and in what way was the approach? You did explain, but just from the independent director's point of view, negotiations different from the previous 2022 offer, which did not go through. So, some ask, will the privatization still go through now that the SG market is heated up? Firstly, I think Eric did a wonderful presentation just now, very comprehensive, very factual, very objective. We're very grateful for the leadership of Eric and his team. The reality that the independent directors have been assessing is the structural reality that the stable securities operate under. The structural reality, they don't change with fluctuating market conditions. So, whilst we welcome stronger markets, better liquidity,

[00:35:20] better initiatives for stock market liquidity, they don't address the structural constraints that continue to persist in the operations of this particular unit. So, the structural constraints we've explained, it's the asset class that we operate in, hospitality. The structural constraint of that asset class is that we have day users or day rates for our asset class. And since COVID, as you've seen from the charts and as Eric has explained several times, investors have preferred more stable, longer lease assets than the daily operating rates that we operate in. So, that's a structural constraint that we operate under and that doesn't change with improving market sentiment and so on.

[00:36:12] And the income is lower with the currency difficulty. So, there are three structural constraints. The asset class is one structural constraint. The second structural constraint that we operate under is the scale of FHT. Scale matters in terms of access to capital, both equity capital as well as debt capital. As Eric has demonstrated, our debt headroom, the access to debt capital is the smallest amongst our peers in the hospitality industry. So, whilst there may be better market sentiments now, and we appreciate that, we welcome that, we want that, we want that for all of you, those market sentiments don't change the structural constraint that we operate under in terms of scale.

[00:36:55] And thirdly, the structural constraint that we happen to operate under at FHT is the geography that we operate in. It is a good idea to diversify. But the flip side of that is that when the operating currencies of those overseas assets depreciate against Singapore dollar, then the good work that Eric and his team have done in improving the performance, improving the valuation of our overseas assets, all that good work is then pulled back by the depreciating currencies of those countries. And as a result, whilst the underlying performance that Eric has shown you on his charts of the hotels that we have overseas have improved, whilst the underlying valuations have improved,

[00:37:48] but when translated back to Singh dollar, the overall improvement and overall valuation uplift has been pulled back. So, these are structural constraints that we operate under and they don't go away with improving market sentiments. I very much wish there was a structural change to the structural constraints, but that's not the reality of the conditions that we face right now. And that's not the reality of what we can foresee going forward. Now, on top of the structural constraints, Eric has explained, we also operate under adverse, you could call it cyclical conditions, such as higher inflation, such as higher interest rates, such as higher economic uncertainty. Those, you may argue, are cyclical,

[00:38:44] but they are present and they continue to persist. So, we've got adverse structural constraints and currently we have adverse cyclical constraints. So, in that context, as independent directors, we've been very mindful, how do we do better for you, the unit holders? We don't want you to remain stuck in a position where we continue to swim upstream in this situation, so we want better value for you. And after a very comprehensive exercise, as Eric has explained, we have come up to a conclusion that this scheme is a good way for you to realize value. And with this value, you now have the freedom to go invest in other situations that you might find appealing.

[00:39:37] I very much hope that you will see Eric again, but this scheme is a way of getting you value, getting you good value and getting you value that is certain. And I hope this is what you will consider. The financial advisors have also supported that. So, we have two financial advisors who have helped us with this exercise of evaluating the strategic options that are available to FHT. And we work very hard, and the board, including the independent directors, work very hard on this as well, evaluating the strategic options that are available to you, unit holders, how to improve value for you. In addition to the two financial advisors,

[00:40:25] when we decided that we would proceed with the scheme of arrangement, we also appointed an independent financial advisor with the sole purpose of opining on the valuation that we're proposing to you. And the independent financial advisor has come to the conclusion that the 71 cents that's on the table is fair and reasonable. So, your fear is that they will lose out if they stay on? I mean, given the current and existing and cornering circumstances, adverse circumstances economically, and your business environment, and the fact that there's currency challenge and other challenges, they will get less, or they may be in dire straits. Well, the factual reality is these structural constraints that we operate under won't go away.

[00:41:20] After the scheme meeting, they will continue to be the same. So, that's the reality of the choice that you have. Continue with the structural constraints, and at the same time, heaped on top of that, the current cyclical adverse conditions continue with that, and of course, we will do our best. But that's what you're swimming against in FHD in the current season. Alternatively, there is 71 cents on the table, which is a good value. It's a premium value. It's a value that's above the valuation of these assets that are in your portfolio. So, that's what we're putting on the table as a choice for you. It is good for you to have a choice,

[00:42:05] and I hope you consider the choice that you're making. Good value, which is certain in cash for you, versus the adverse structural conditions that we operate under, plus the adverse current cyclical conditions that we operate under. That's the choice that we're offering you. So, one of the options in the strategic review was the sale of the entire FHD platform to a third party. What steps were taken to assess whether an open market or competitive bid process might yield a higher offer than the current 71 cents concentration? I completely understand the question, completely understand the sentiment behind that as well. In my previous background, I was a banker for over 20 years,

[00:42:57] so I completely understand how this works as well. So, in any possible consideration of a sale of a platform, which might yield a high evaluation, in that kind of scenario, there needs to be a seller who is willing to sell. If the seller is not willing to sell, then there is no transaction. There is no option to put before you. And when we checked with our sponsor, our sponsor has been clear that this asset class is their long-term interest. So, obviously, in that context, there is no seller selling, and therefore, there is no option to present before you. That's the situation. So, that's about what I would ask up to now,

[00:43:53] and I will open this to the floor. Anyone, any other questions? Yes. You have a mic, please. Please give me a name and ask the question. Good evening. My name is Nancy. I'm a long-term state-per-security holder. I went through the last round of failed privatization. So, this time, I just wonder if Fraser Property is buying over. So, all these structural problems, they will have to take over. But it seems that the price of Fraser Property has shot up since the announcement of privatization of Fraser Hospitality Trust. So, they are very happy to take over the portfolio,

[00:44:50] so it doesn't seem to be a burden to them. Okay. Good question. And also, another thing is that interest rate, I mean, the Fed is holding back the cutting of the rate, but I think eventually, this year, it definitely will be cut at least once or twice, because a lot of pressure from somebody, but I think more likely that interest rate will be adjusted downward. So, the worst, it seems to be over, in terms of over interest rate burden. So, when this burden is temporarily relieved or going to be relieved, so, we are just letting go and give up and say, yeah, no one ready, just let other people take over this trust,

[00:45:47] take over all the assets. So, it seems like there's no stamina already, no? So, I just wonder why they're giving up. Yeah, why they're giving up. And Fraser Property is happy to take over. Yeah. Very happy to take over. So, later, after event, I don't know what we will see, but if we see a scenario where all these hotels are doing very well and the currency, can we see for it for certain the other way? Can I ask at what price did you buy this? IPO time. IPO, I see. So, that was how much? 88 cents at IPO. 88 cents at IPO. But you would have subscribed for the rice issue, I presume.

[00:46:33] Rice, yeah, so average cost, 81. Yeah, 81.28 cents. Yeah. Well, like we presented earlier, total return is about close to 30% over the whole period. But other people put in FT during certain times, they can get quite high. So, this is risky, that one is risk-free. So, I was just thinking, this 3.0% is not really a good return. Alright, so let's let him answer. Yeah. Not a good reason. I thought you gave very good reasons. I did. Thank you for the question and comments, Miss Nancy. Of course, I agree with you. You know, the 30% over a period of 11 years could be better, definitely.

[00:47:21] And precisely, precisely because of the structural constraints that we have been operating in, the challenges that we face in terms of macroeconomic situation, we haven't been able to grow the DPS, meaningfully. It's truly reflected in the numbers. And that's why we felt, we considered all this and we felt that, you know, really in this scheme to, you know, put forward a deal at 71 cents. At the premium of 11.1%, you are actually better off as a unit holder. Personally, I'm also a unit holder myself. I rarely do as much as I do it for myself as well. I would rather take at premium and invest in something that most of the

[00:48:02] average are trading at a discount. So you can actually recycle your capital in a sense to achieve a higher yield in a sense. And in response to the questions that you mentioned about interest rate, interest rate has remained higher for longer. Possibly it may come down a little bit. Maybe one time this year, I don't know. We don't have crystal ball. But the fact of the matter is that when we secure a loan, we enter into long term funding. Even if interest rate will come down tomorrow, we will not be able to enjoy the savings immediately because we have locked in the funding across various durations.

[00:48:42] It will take some time before it comes, you know, before we achieve any savings, if any, in a sense. And the other critical point that I also want to point out is that we have been operating for 11 years. And some of the properties have aged over time, were in time. There were plans or there are plans for us to renovate and further paychecks may be required. And because when we have to renovate, we will have to borrow more and there will be higher interest expense. And during the AEI, asset enhancement initiatives that we embarked, during that period, again, the income will be impacted as well, basically.

[00:49:26] Because your operations are affected. Hotels are very sensitive to noise and ambience. So in terms of returns, in terms of rental going forward, possibly it will be impacted because of AEI. At the same time, you borrow loans to actually renovate. You have higher interest. So I think we need to put that into perspective. I noticed that the NAB has come down a bit. Yes, the NAB has come down a little bit, not because in terms of devaluation in local currency has come down, more so because of forex. So the foreign currencies have actually depreciated against Singapore dollars. Well, if you saw the trend that I presented,

[00:50:06] really all the currencies were coming down against Singapore dollars. Okay, next question. Who is that? Yes. Hello, I'm Chia. I'm just quite curious throughout the whole evening, right? I hear a lot of negativity, a lot of pessimism, right? So I want to understand from the independent director, right? Is there nothing good about FHT? Is FHT really so bad or is the people behind so bad? I mean, for a shareholder of FBL, we are sitting on the price asset here, right? And for FBL perspective, this Bish Road area, this asset that we are sitting,

[00:51:02] it's going to be valued very differently. So once they take over the FHT, so that's why they are willing to take. I have allowed the first question, second question, don't ask him to pass judgment on himself. That's not fair. Okay, the first question. Yeah, so very grateful to the first questioner in terms of your loyal support, your long-term support. Thank you so much. Really appreciate it. You are a dream shareholder for any REIT, for any company. Thank you. What I was explaining just now is the background to our decision here. What I wasn't saying is that FHT is bad or the FHT management is bad.

[00:51:48] On the contrary, FHT management has done an excellent job in swimming upstream, swimming against the tide. The tide is not something we chose, is not something we inflicted on ourselves. The tide happens to be structural in the industry that we operate in. That's the reality that we've been facing. Management has done an excellent job in recovering lost ground. Lost ground during COVID, lost ground in all the structural constraints that I've explained and that Eric has presented with the data just now. Against all of that difficulty, and that's what I was explaining, the difficulty of the environment, not the negativity of our FHT, not the negativity of our management team.

[00:52:39] Against all of that adversity, the management team has done a fabulous job. We examine this as independent directors. We ask for the details behind the operating performance. We see the headlines, but we go way deeper than the headlines. We look at the individual performance of the individual asset in local currency and we look at the performance of those assets against peers. Management has done a wonderful job. They've sweated the asset. They've maximized the asset. They've done everything they can to save costs, to improve the performance of these assets. Yet against all of that hard work, when it comes through into Singapore dollar reporting, what you see is results that are flat,

[00:53:25] that are struggling to keep up to pace. That's not because we are a bad REIT or we have a bad management team. It's because of the structural constraints that we happen to operate under. Against this structural constraint, structural constraints don't go away. That's why we've been working very hard to think of ways to deliver value to you, unit holders, especially to unit holders who have been so loyal to us from the very beginning. We appreciate the sentiment. We appreciate your loyalty. We're not giving up. We're trying very hard to think how to deliver better for you. Now, the structural constraints don't go away. However hard we work,

[00:54:08] and Eric is right also in that we have to refurbish assets and when there's refurbishment, there's cost, and we have to work even harder, we will do that. But the structural constraints don't go away. We want to give you a shot at a better value that is certain, a value that is at a premium to the valuation of these assets. And this property, for example, has been valued. And the offer you're getting in the scheme is at a premium to the valuation of this property plus all the other properties. They've been valued recently, and that valuation is in your scheme document, valued as at 30th of April.

[00:54:54] So we've been working very hard to give you a premium valuation. The valuation that we have undertaken, and that's in your scheme document, that's the valuation of market. And that valuation considers operating circumstances and sentiment. What we have worked very hard towards is giving you a premium to that valuation. And you don't have to wait for the valuation to be crystallized in the future. We're giving you that premium valuation in certainty on 30th September, should the scheme go through. That's what we're presenting you as an option. So thank you, sir, for your question. Please don't misunderstand. It is not a criticism of FHD or the management team.

[00:55:48] It is merely a factual explanation of the circumstances that we operate under. Our peers operate under the same constraint as well. But in addition to the constraints that we all operate under in the same industry, we also operate under a structural constraint of smaller scale relative to our peers. So it's tough. They've done a wonderful job, and they will do a wonderful job, but it's very tough. And we don't want to shortchange you. We want to present you the option of a premium valuation so you have that optionality before you. And we're doing this for your interest. Thank you. A banker who sounds very sincere to me.

[00:56:33] I am sincere. I don't just sound sincere. I am sincere. And a CEO who is very hardworking. Okay, so let's not make any insinuations or accusations. Let us make an informed decision. All right? You are clever enough. We all are discerning investors. And CIO members cannot be better than us, right? No one can be better than us because we are clever. We are smart. SIA, smart investors always succeed. All right, so now we are almost coming to the end. Is there someone with a very pressing question? Everything has been asked, but anything else? We'll ask questions. Yes. I'm a loyal shareholder since IPO time.

[00:57:29] I got four lots for my IPO, but this is experience. I am telling the investors that the dividend I received, actual dividend, divided by the IPO price is only 4% as compared to the IPO of 7% you declare. So now I don't believe in IPO. I think it's overpriced. I never buy any IPO, but I'm very grateful for the right issue, which I got more access, a lot of access, which I bring down the price at 60.3 cents. So now I'm still making good money. Good, good money. So I would like to give up my share. I think it's a very fair deal, and I will support it, definitely.

[00:58:16] The first, very disappointed in the first offer that didn't go through, but to me it's a blessing in disguise. I collect the mom dividend since 2022. So it's a blessing in disguise for me. Just a comment, not a question. Thank you so much. Thank you so much. Okay, so you have heard the pros and cons. You have heard all the detailed reasons. Now it's time for you to make a decision. Please go home. On the way there are some temples you can pray. All right, and then get home, and then please discuss with your wife or husband, and then make an informed decision. You have heard why they are doing this.

[00:58:55] You have also heard some other views, but in the main I am very impressed. But I don't have any shares or units. I don't know. I am a very poor man. But you all can now, as you said, there is a view that you heard, and there are other views. Please go back and make an informed decision. Okay, thank you for coming. Thank you very much. Thank you, David. Thank you. Thank you very much. Thank you. Good to see you. Thank you.