Far East Hospitality Trust on Tuesday entered into a sale and purchase agreement with The Straits Trading Co. Ltd. (STC) to acquire Rendezvous Grand Hotel Singapore and Rendezvous Gallery for S$285 million (S$217 million in cash and S$68 million in FEHT stapled securities). This US$230.3 million deal is Far East H-Trust’s first acquisition since its initial public offering in August 2012.
Also announced on Tuesday was that STC and Far East Orchard Ltd. (FEOrchard) signed a joint venture to establish a 30/70 partnership to pursue and conduct hospitality management and hospitality-related businesses and investments in real estate.
Under the terms of the joint venture, STC – holding a 30% stake – will contribute its Rendezvous Grand Hotel Melbourne, Rendezvous Hotel Perth and Rendezvous Studio Hotel Perth Central, and 13 hotel management contracts and leases to the joint venture and will receive net cash of S$56.2 million (US$45.4 million) FEOrchard will contribute 25 hotel and service residence management agreements and contribute cash of S$97 million (US$78.4 million) to the JV.
The joint venture will enable STC and FEOrchard to transform their existing hospitality businesses into one of the largest hotel operations in Asia Pacific as it will initially manage more than 6,000 rooms.
STC Chairman Chew Gek Khim, commented, “This new joint enables Straits Trading to continue its strategy of transforming its portfolio of businesses into more effective growth engines, each a leading player with economies of scale. The combination of FEOrchard’s operational expertise and STC’s strong hotel presence in Australia and New Zealand through its Rendezvous hotels will create a formidable hospitality joint venture which we plan to expand in their respective and new markets.”