Latest news with #Acrophyte
Business Times
24-06-2025
- Business
- Business Times
Acrophyte Hospitality Trust mulls suspending or reducing distributions under strategy review
[SINGAPORE] The managers of Acrophyte Hospitality Trust are considering temporarily suspending or reducing distributions, equity fundraising or a portfolio recalibration through brand repositioning among other options as part of its ongoing strategy review for the hospitality stapled group. This follows an announcement on May 30 when the managers said they were evaluating a range of options for the stapled group, including a potential transaction involving its stapled securities, in light of potential capital expenditure needs related to its portfolio's asset enhancement requirements. The stapled group faces 'various challenges' in funding the significant capital expenditures that many of its properties require, said the managers on Monday (Jun 23). A preliminary assessment places its capital expenditures for FY2025 to FY2027 at around US$100 million, though the amount may be higher as ongoing uncertainties in US trade and immigration policies could exert further inflationary pressure on imported materials and labour costs. This amount comprises asset enhancement initiatives for 25 of the 33 hotels in its portfolio, in addition to regular maintenance and upkeep requirements. While divesting relatively aged properties that require substantial capital expenditure – such as Hyatt Place Detroit Auburn Hills – is a strategy that Acrophyte has pursued, the process has been slow. This is due to a combination of factors including elevated interest rates and a large supply of hotels that are competing for sale, the managers said. Only four properties have been divested since 2023. They said they are still reviewing options and there is no certainty that any transaction will materialise from the strategy review. They urged stapled securityholders to exercise caution in dealing with their stapled securities and to refrain from taking action that could be prejudicial to their interests. Units of Acrophyte ended Monday 1.7 per cent or US$0.005 higher at US$0.30.
Business Times
05-06-2025
- Business
- Business Times
Acrophyte Hospitality Trust proposes disposal of Michigan hotel for US$6.7 million
[SINGAPORE] Acrophyte Hospitality Trust has proposed the disposal of a hotel in the US city of Auburn Hills in Michigan for a consideration of around US$6.7 million, said managers of the stapled group on Thursday (Jun 5). Through its indirect wholly owned subsidiary ARA USH Chicago, the stapled group on Wednesday entered a conditional purchase and sale agreement to sell Hyatt Place Detroit/Auburn Hills to AHM Hospitality. The property is a 127-room hotel in Auburn Hills which commenced operations in 1996. It is around 50 kilometres outside of Detroit and is located off Highway 75, among other economy-branded hotels, residential buildings and small retail centres. An independent appraiser valued the property at US$7 million as at December 2024, said the managers. The sale consideration will be satisfied entirely in cash. Negotiated on a willing buyer and willing seller basis, it took into account the independent valuation and represents a 5 per cent discount to it, the managers added. Net divestment proceeds are estimated to be around US$6.2 million, after factoring in a divestment fee for the managers of US$33,000, or 0.5 per cent of the sale consideration, and US$436,000 of transaction costs that the sale is expected to incur. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The divestment is set to be completed in the third quarter of 2025, subject to conditions. Net proceeds from the proposed sale may be used to acquire accretive and higher yield properties, pare down existing debt and fund the capital expenditure and general working capital needs, stated the managers. For illustrative purposes, assuming the sale was completed on Jan 1, 2024, Acrophyte's distributable income would have risen from US$10.3 million before the divestment to US$11.2 million after the transaction, as at Dec 31, 2024. Its distribution per stapled security would have increased from US$0.01772 to US$0.01927. Rationale for sale The divestment would benefit Acrophyte's stapled securityholders by allowing the stapled group to avoid unnecessary capital outlay and reallocate resources towards higher-performing assets, said the managers. They pointed out that the hotel ranks in the bottom quartile of Acrophyte's portfolio in terms of valuation and gross operating profit (GOP), accounting for just 1 per cent of its total portfolio valuation as at Dec 31, 2024, the lowest among all assets. Its GOP margin for the 2024 financial year stood at 0.7 per cent, which was significantly below the portfolio average of 35.3 per cent. This resulted in negative net property income which adversely impacts distributable income, the managers noted. Moreover, the property's value has declined by 43 per cent on persistent market weakness and ongoing underperformance. Its RevPar Index (a measure of competitive performance) remains weak at 78 per cent. The hotel also faces operational challenges due to the tight labour market in the Detroit suburb, where a shortage of skilled workers has created staffing difficulties and reduced operational efficiency. As one of the older assets in Acrophyte's portfolio, it will require substantial capital expenditure relative to its current value – much of which would go towards maintenance and renovations, with limited upside potential given the market's continued underperformance, the managers added. Hence, any capital investment in the property would dilute distributable income.
Straits Times
30-05-2025
- Business
- Straits Times
Singapore-listed Acrophyte Hospitality Trust jumps as it ‘evaluates strategic options'
Seven more hotels in Acrophyte's portfolio are slated for asset enhancement initiatives in 2025, after six hotels completed theirs in 2024. PHOTO: ACROPHYTE HOSPITALITY TRUST SINGAPORE - A strategic review is underway for Acrophyte Hospitality Trust, formerly known as ARA US Hospitality Trust, as a potential transaction involving its stapled securities is on the table but not guaranteed. The renaming of the Singapore-listed hotel trust was done in 2024 after the family of billionaire couple Gordon Tang and wife Celine completed their takeover of ARA US Hospitality Trust's managers. Their vehicle for this was Acrophyte, which was known as Chip Eng Seng until the Tangs privatised the company in 2023. The Tang family also upped their stake to become the trust's largest unit-holder and sponsor. On May 30, the managers of Acrophyte Hospitality Trust said that they are currently evaluating a 'range of strategic options' in light of the potential capital expenditure needed to enhance its portfolio of hospitality assets in the United States. 'In connection with their evaluation, the managers are also in discussions with the sponsor in respect of a potential transaction involving the stapled securities,' they said. Despite being in the process of reviewing options, the managers emphasised that 'there is no certainty that any transaction will materialise' from the ongoing review or discussions. Acrophyte's stapled securities jumped 11.3 per cent, or three cents, to 29.5 cents as at 11.24am on May 30. This after a gain of 7.5 per cent on May 29, before the announcement. Seven more hotels in Acrophyte's portfolio are slated for asset enhancement initiatives in 2025, after six hotels completed such initiatives in 2024. Work on two Marriott-branded hotels will commence in June as that on five Hyatt-branded ones will start in November. The hospitality stapled group comprises Acrophyte Hospitality Property Trust and Acrophyte Hospitality Management Trust. For the fiscal first quarter of 2025, its revenue declined 7.7 per cent to US$33.5 million from US$36.2 million in the year-ago period amid an 8.3 per cent year-on-year downsizing of its portfolio. Its Q1 operating profit was 12.8 per cent lower at US$9.3 million, from US$10.7 million in the previous corresponding period. THE BUSINESS TIMES Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
30-05-2025
- Business
- Business Times
Acrophyte Hospitality Trust undergoes strategic review, in talks for potential transaction involving stapled securities
[SINGAPORE] A strategic review is underway for Acrophyte Hospitality Trust , as a potential transaction involving its stapled securities is on the table but not guaranteed. On Friday (May 30), the managers said that they are currently evaluating a 'range of strategic options' for the hospitality stapled group. This is in light of its potential capital expenditure needs in relation to the ongoing asset enhancement requirements of its existing portfolio. 'In connection with their evaluation, the managers are also in discussions with the sponsor in respect of a potential transaction involving the stapled securities,' they said. Despite being in the process of reviewing options, the managers emphasised that 'there is no certainty that any transaction will materialise' from the ongoing review or discussions. Seven more hotels in Acrophyte's portfolio are slated for asset enhancement initiatives in 2025, after six hotels completed such initiatives in 2024. Work on two Marriott-branded hotels will commence in June as that on five Hyatt-branded ones will start in November. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The hospitality stapled group comprises Acrophyte Hospitality Property Trust and Acrophyte Hospitality Management Trust. It was formerly known as ARA US Hospitality Trust. In its Q1 2025 business update, its revenue declined 7.7 per cent to US$33.5 million from US$36.2 million in the year-ago period amid an 8.3 per cent year-on-year downsizing of its portfolio. Its Q1 operating profit was 12.8 per cent lower at US$9.3 million, from US$10.7 million in the previous corresponding period. Stapled securities of Acrophyte ended pn Thursday 9.4 per cent or US$0.025 higher at US$0.29, before the announcement.
