The deal is expected to be completed in the first quarter of 2026

 

[SINGAPORE] ARA USH Chicago, an indirect wholly owned subsidiary of Acrophyte Hospitality Management Trust (AHT), is selling a hotel in the US for US$7.8 million.

 

Located in Memphis, Tennessee, the Hyatt Place Primacy Parkway hotel has 126 rooms and is 11.3 miles (18.2 km) south-east of the Memphis central business district, the managers of AHT noted in a bourse filing on Wednesday (Dec 17).

 

An independent valuation by DBS Trustee, as trustee of AHT, placed the hotel at US$8.5 million as at Jul 31, based on the income capitalisation and sales comparison approach. 

 

The proposed sale price &ndash which the managers said was negotiated on a willing-buyer, willing-seller basis &ndash represents an 8.8 per cent discount to the valuation.

 

The managers added that the buyer is named Shivam Patel. 

 

The sale is expected to be completed in the first quarter of 2026, and set to be settled wholly in cash. 

 

The managers expect about US$456,000 in transaction costs, and added that they are &ldquo entitled to a divestment fee&rdquo of about US$39,000, which is 0.5 per cent of the sale consideration.

 

Net divestment proceeds are expected to come in at about US$7.3 million.

 

The Memphis hotel was described as a &ldquo non-core and underperforming&rdquo asset in AHT&rsquo s portfolio. 

 

&ldquo The hotel ranks in the bottom quartile in terms of its contribution to both valuation and gross operating profit (GOP), accounting for only 1.2 per cent of the total portfolio value as at Dec 31, 2024,&rdquo said the managers.

 

&ldquo Operational performance has deteriorated significantly in recent years. Its GOP margin stood at 17.2 per cent in 2024, significantly below the trust&rsquo s portfolio average of 35.3 per cent in 2024,&rdquo they noted. 

 

The hotel &ldquo continues to underperform&rdquo , the managers added, pointing out that its revenue per available room index stood at 87 per cent in 2024. 

 

Noting that the hotel commenced operations in 1996, the managers said that various renovations of guest rooms and public areas would require a capital investment of about US$3.7 million, or 44 per cent of the asset value, to maintain its Hyatt Place branding.

 

This is &ldquo substantial capital expenditure&rdquo relative to its value as &ldquo one of the older properties&rdquo in AHT&rsquo s portfolio, said the managers. 

 

They added that given &ldquo weakened market conditions and continuing property underperformance&rdquo , the property&rsquo s value has declined 34.6 per cent over the past five years. 

 

The managers said the proposed divestment will &ldquo free up capital&rdquo to be redeployed towards capital expenditure needs for ongoing renovations of properties in AHT&rsquo s portfolio paring down existing bank borrowings acquiring accretive and higher-yield properties and/or meeting &ldquo general working capital needs&rdquo .

Acrophyte Hospitality Trust, formerly known as ARA US Hospitality Trust, is divesting Hyatt Place Detroit Livonia for a consideration of US$10.0 million ($12.97 million), 2.9% below its last valuation of US$10.3 million at July 31.

 

In a Dec 10 bourse filing, the manager of Acrophyte Hospitality Trust says its indirect wholly-owned subsidiary ARA USH Chicago entered into a conditional purchase and sale agreement with NJA Management Group on Dec 8.

 

Distribution per unit (DPU) for Dec 31, 2024 would have been 1.866 US cents, higher than the actual 1.772 US cents, had Acrophyte Hospitality Trust completed the proposed sale on Jan 1, 2024.

 

The hotel, which commenced operations in 1998, has 127 rooms and is located in Livonia, a suburb of Detroit Michigan. The hotel is situated off Highway 275 within a retail centre.

 

The hotel is predominantly surrounded by residential buildings, but there are also healthcare offices and several industrial parks, says the manager of Acrophyte Hospitality Property Trust and the trustee-manager of Acrophyte Hospitality Management Trust.

 

The managers are entitled to a divestment fee of approximately US$50,000, being 0.5% of the sale consideration. In addition, the sale is expected to incur approximately US$495,000 of transaction costs. Accordingly, the net divestment proceeds are estimated to be approximately US$9.5 million.

 

The proposed sale will free up capital, which can be redeployed to either fund the capital expenditure needs in relation to the ongoing renovation requirements of the existing portfolio pare down existing bank borrowings to improve the portfolio&rsquo s average leverage ratio and increase debt headroom acquire accretive and higher yield properties or meet general working capital needs.

 

The divestment is expected to be completed in 1Q2026.

 

Prior to the proposed sale of Hyatt Place Detroit Livonia, Acrophyte Hospitality Trust had 32 hotels in its portfolio and 4,188 rooms.

The drop is largely due to hotel dispositions and renovations, as well as increases in operating expenses

 

[SINGAPORE] Acrophyte Hospitality Trust&rsquo s net property income (NPI) for the first nine months of 2025 fell 13.9 per cent to US$29.1 million from US$33.8 million in same period last year.

 

Revenue clocked in at US$121.2 million, down 6.3 per cent from US$129.4 million in the same period last year. 

 

The trust also recorded a lower operating profit of US$41.9 million, down 9.6 per cent from US$46.3 million.

 

The declines were mainly due to hotel dispositions and renovations, as well as increases in operating expenses like labour and insurance, said the trust&rsquo s managers on Thursday (Nov 13).

 

The disposal of two hotels led to a 5.7 per cent reduction in available rooms for sale and there was lower revenue contribution from two high-performing hotels which were undergoing brand-mandated renovations.

 

The operational performance for the first nine months of 2025 was impacted by a combination of portfolio contraction and impact of renovations, as well as &ldquo softer lodging demand&rdquo amid macroeconomic uncertainty.

 

The stapled group&rsquo s portfolio contracted 5.9 per cent on the year. As at September, it operates 32 hotels, down from 34 in the previous year. 

 

In September, the managers completed the sale of Hyatt Place Detroit Auburn Hills for about US$6.7 million. The net proceeds will be used for &ldquo brand-mandated renovations&rdquo at other properties within the portfolio, working capital requirements or debt repayment.

 

As at end-September, Acrophyte Hospitality Trust&rsquo s aggregate leverage ratio stood at 42.6 per cent. 

 

Acrophyte Hospitality Trust mulls suspending or reducing distributions under strategy review

Its weighted average debt maturity was at 1.5 years. 

 

To date, 50.5 per cent of the trust&rsquo s loan portfolio is hedged to fixed rates.

 

Lee Jin Yong, chief executive officer of the managers, said: &ldquo We will continue to focus on improving operational efficiency and maintaining financial flexibility...&rdquo

 

Sats earnings for 2QFY2026 up 13.3% y-o-y to $78.9m interim dividend of 2 cents declared

 

Sats has reported earnings of $78.9 million for the 2QFY2026 ended Sept 30, up 13.3% y-o-y. For the 1HFY2026, earnings grew 11.2% y-o-y to $149.8 million.

 

Revenue for the second quarter of FY2026 came in 8.4% y-o-y higher at $1.57 billion, and for the 1HFY2026, revenue grew 9.1% y-o-y to $3.08 billion.

 

Sats says that the increase in revenue for 2QFY2026 is attributable to strong cargo performance alongside steady contributions from ground handling and food services.

 

Gateway services revenue rose 10.7% y-o-y to $1.22 billion, driven by continued market share gains with cargo volumes that outperformed global benchmarks.

 

Food solutions revenue grew 1% y-o-y to $356.5 million, reflecting stable inflight meal demand.

 

The share of earnings from associates and joint ventures decreased 7.5% y-o-y to $27.5 million due to ramp-up costs associated with new customer onboarding in a joint venture.

 

The board of directors has declared an interim dividend of 2 cents per share.

 

Sats says that it has outperformed IATA benchmarks over the past eight consecutive quarters, though the second quarter volumes reflected in part accelerated customer shipments ahead of tariff implementations.

The manager says it faces challenges in funding the capital expenditures that many of its properties require

 

[SINGAPORE] The managers of Acrophyte Hospitality Trust : XZL -11.67% 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&rsquo s asset enhancement requirements. 

 

The stapled group faces &ldquo various challenges&rdquo 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 &ndash such as Hyatt Place Detroit Auburn Hills &ndash 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. 

 

The managers 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. 

 

Divestment will allow stapled group to avoid unnecessary capital outlay and reallocate resources towards higher-performing assets, say managers

 

[SINGAPORE] Acrophyte Hospitality Trust : XZL -3.12% 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 into 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 in transaction costs that the sale is expected to incur.

 

The transaction 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-yielding 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&rsquo 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&rsquo 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&rsquo 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 had an adverse impact on distributable income, the managers noted.

 

Moreover, the property&rsquo s value has declined by 43 per cent since 2019 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&rsquo s portfolio, it will require substantial capital expenditure relative to its current value &ndash much of which would go towards maintenance and renovations, with limited upside potential given the market&rsquo s continued underperformance, the managers added.

 

Hence, any capital investment in the property would dilute distributable income.

Managers say there is no certainty that any transaction will materalise

 

[SINGAPORE] A strategic review is underway for Acrophyte Hospitality Trust : XZL +9.43%, formerly known as ARA US Hospitality Trust, as a potential transaction involving its stapled securities is on the table &ndash but not guaranteed.

 

On Friday (May 30), the managers said they are evaluating a &ldquo range of strategic options&rdquo 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.

 

&ldquo In connection with their evaluation, the managers are also in discussions with the sponsor in respect of a potential transaction involving the stapled securities,&rdquo they said.

 

Despite being in the process of reviewing options, the managers emphasised that &ldquo there is no certainty that any transaction will materialise&rdquo from the ongoing review or discussions.

 

Seven more hotels in Acrophyte&rsquo 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, and that on five Hyatt-branded ones, in November.

 

The hospitality stapled group comprises Acrophyte Hospitality Property Trust and Acrophyte Hospitality Management Trust.

 

In a Q1 2025 business update, it said 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.

 

Acrophyte&rsquo s move follows a similar strategic review by Frasers Hospitality Trust&rsquo s (FHT), announced in April.

 

In May, FHT&rsquo s sponsor Frasers Property renewed its bid to privatise the stapled group at S$0.71 per stapled security, following an unsuccessful attempt in 2022. FHT comprises Frasers Hospitality Reit and Frasers Hospitality Business Trust.

 

Acrophyte was renamed from ARA US Hospitality Trust after the manager changed hands to come under Acrophyte AM, a unit of Acrophyte, which largely consists of the businesses of former listco Chip Eng Seng.

 

The entities are all ultimately controlled by Gordon and Celine Tang, who are well known in property and construction circles.

No smoke without fire

• Acrophyte possibly working with Sponsor on a potential transaction, given seven hotels to undergo AEI in 2025
• The stock is illiquid and remains undervalued, with renewed interest following recent privatisation news in the Singapore hotel sector
• Enterprise value per key low and at a steep discount to US hotel transactions
• Maintain BUY TP under review 

What&rsquo s new
Acrophyte Hospitality Trust has seen its share price run up by over 30% over the past month, with the surge accompanied by increased trading volumes. In an announcement this morning, the Managers are currently evaluating a range of strategic options in light of the potential capex needs, with seven hotels to undergo AEI in 2025. In connection with their evaluation, the Managers are also in discussions with the Sponsor in respect of a potential transaction involving the Stapled Securities.

Our view 
The counter has been an illiquid and relatively lesser-known name in the Singapore hospitality landscape as it has a small market cap and 100% US exposure. We note that the heightened interest in Acrophyte could be driven by recent news of several privatisation plays in the Singapore hotel sector, and the market positioning for a potential privatisation of Acrophyte given its deep value. Based on upper midscale hotel transactions in the US in 2024, which have averaged close to USD 400,000 per key, Acrophyte' s current enterprise value per key of USD 103,000 appears significantly undervalued, though differences in asset class and the need for capex could warrant a discount. Nonetheless, Acrophyte still offers compelling value at less than 0.4x P/NAV.

Maintain BUY TP under review.

Acrophyte Hospitality Trust another listed entity to ' evaluate strategic options'

The managers of Acrophyte Hospitality Trust are " evaluating a range of strategic options" , citing capex needed to enhance its portfolio of hospitality assets in the US.

" In connection with their evaluation, the managers are also in discussions with the sponsor in respect of a potential transaction involving the stapled securities."

As at March 31, its NAV per unit was 71 US cents, versus its May 29 closing price of 26.5 US cents.

Its portfolio comprises 33 select-service hotels with a total of 4,315 rooms across 17 states in the United States.

The entities are all ultimately controlled by Gordon and Celine Tang, who have multiple interests in property and construction.

Net property income drops 18.1% to US$5.3 million

 

Key points (Q1 2025)

 

Revenue: US$33.5 million (-7.7%)

 

Operating profit: US$9.3 million (-12.8%)

 

[SINGAPORE] Acrophyte Hospitality Trust : XZL 0%&rsquo s revenue for the first quarter of 2025 fell 7.7 per cent to US$33.5 million, from US$36.2 million in Q1 2024.

 

In a business update on Wednesday (May 7), the managers attributed this to an 8.3 per cent year-on-year reduction in portfolio size. The stapled group now operates 33 hotels across 17 states in the US. 

 

The managers also reported 12.8 per cent lower Q1 operating profit at US$9.3 million, from US$10.7 million in the previous corresponding period.

 

Its net property income dropped 18.1 per cent to US$5.3 million, from US$6.4 million previously. 

 

Lee Jin Yong, chief executive of the managers, said: &ldquo Our operational performance during the first quarter of 2025 was affected by the absence of contributions from three disposed hotels in FY2024. Furthermore, seven hotels transitioned to new management, and utility expenses increased due to severe winter weather conditions.&rdquo

 

Meanwhile, occupancy increased by two percentage points year on year to 61.5 per cent. 

 

Net asset value per stapled security fell to US$0.71 as at Mar 31, 2025, from US$0.73 as at Dec 31, 2024. Weighted average debt maturity stood at two years, compared with 1.5 years in the prior quarter.

 

Hotels&rsquo performance and outlook

The managers noted that the US lodging market has stabilised, with hotel occupancy expected to grow as demand outpaces supply.

 

In Q1, Acrophyte&rsquo s average daily room rate rose 0.2 per cent year on year to US$131, while revenue per available room was up 3.5 per cent on year at US$81.

 

&ldquo The recovery in domestic business and group demand is expected to drive increases in average daily rates, contributing to the lodging industry&rsquo s continued stability,&rdquo they added.

 

The stapled group had about US$25.7 million in cash and cash equivalents as at Mar 31, including reserves earmarked for upcoming capital expenditures.

 

Lee said the managers are &ldquo cautiously optimistic&rdquo about the demand outlook for this sector amid macroeconomic uncertainties.

 

In 2025, seven more hotels in Acrophyte&rsquo s portfolio will undergo asset enhancement initiatives. Work on two Marriott-branded hotels will begin in June, while that on five Hyatt-branded ones will start in November. This follows six hotels that completed such initiatives in 2024.

 

Acrophyte Hospitality Trust was previously known as ARA US Hospitality Trust.