Gordon Tang Family Set to Take Over as ARA US Hospitality REIT Sponsor From ESR

Mysterious mainland investor Gordon Tang and his wife Celine are set to expand their empire of Singapore real estate companies with the Tang family set to take control of the manager of ARA US Hospitality Trust at the same time that they become the largest unit-holder in the SGX-listed REIT.

Acrophyte Pte, which was known as Chip Eng Seng until the Tangs privatised the company last year, early this week said it entered into an agreement to purchase 100 percent of the two companies which manage the REIT and its $700 million portfolio of US hotels from ARA Asset Management, a unit of ESR.

In a separate transaction, the couple’s children, Tang Jialei and Tang Jialin, through a separate entity named Acrophyte Ltd, agreed to acquire 110.2 million stapled securities, or an additional 19 percent interest in ARA H-REIT held by ARA Asset Management, the trust’s sponsor. At the trust’s closing price of $0.28 on 27 May, the last trading day before the deal was announced, the REIT stake would be valued at $165 million.

With the Tangs holding 9.3 percent of ARA US Hospitality Trust’s equity prior to the deal, the family’s interest in the REIT will more than triple through the transaction to 28.3 percent upon completion.

The deal continues a streak of takeovers by the Tang family, the source of whose wealth has never been made public, with published accounts indicating that the couple have extensive dealings with the family of former Thai prime minister Thaksin Shinawatra.

ESR Streamlining Continues

The parallel transactions pave the way for the Tangs to take over sponsorship of the REIT from ESR Group with the Tangs buying all 1.5 million shares in the capital of ARA Trust Management and all 50,000 shares in the capital of the trustee-manager, the two companies which jointly manage the REIT, for an undisclosed sum, according to a stock exchange announcement.

Vijay Natarajan, vice president for real estate and REITs at RHB Bank Singapore, said the ARA US Hospitality Trust disposals are in line with a streamlining program undertaken by ESR, which two weeks ago announced that it had received a take-private offer from a consortium of investors including Starwood Capital.

“The deal in our view does not come as a surprise as we see this move as part of ESR Group’s broader ongoing strategic review of its non-core portfolio in the traditional real estate sector and streamlining of its focus on the new economy sector,” Natarajan told Mingtiandi in response to the announcement.

Prior to the deal announcement, shares in ARA US Hospitality Trust were still down 66 percent from pre-pandemic levels. The REIT’s unit price rose nearly 4 percent to $0.29 after the news came out and closed at $0.28 on Friday.

“Overall, we see this move as slightly positive for the REIT as we believe the new investor may be more inclined to support future growth with additional capital,” Natarajan added.

Financial details of the transactions were not disclosed. DBS Bank and United Overseas Bank acted as financial advisors to the Tangs.

ARA US Hospitality Trust has a portfolio of 35 select-service hotels with 4,573 rooms operating under brands including Hyatt, Marriott and Hilton. Among its most valuable properties are the 135-key AC by Marriott Raleigh North Hills in North Carolina and the 150-room Hyatt House Boston Burlington in Massachusetts.

The trust announced on 9 May that it has agreed to sell two Hyatt-branded hotels for $31 million, with that deal expected to trim its holdings to 33 properties worth over $700 million.

ARA H-REIT booked $36.2 million in revenue in the first quarter, on par with its performance a year earlier, with net property income inching up by 1.1 percent to $6.4 million during the period, according to its latest business update.

Tang Empire Expands

With the Tang family also ranking as the largest unit-holder in SGX-listed Suntec REIT, the ARA US Hospitality Trust deal comes after the clan completed their S$589 million (then $440 million).privatisation of Chip Eng Seng in April of 2023.

The deal for that builder and developer followed the Tang’s S$493 million privatisation of developer SingHaiyi in January 2022.

The Tangs and their network of companies have also been active at the project level in Singapore, including taking a 21 percent stake during 2022 in the S$1.7-billion redevelopment of 8 Shenton Way in Tanjong Pagar through Chip Eng Seng, SingHaiyi and Haiyi Holdings.

In June of that year, SingHaiyi entered the top bid to acquire a residential plot along Katong’s Dunman Road via a public tender for S$1.28 billion.