The Straits Trading Company (STC) is selling its hotels in Singapore to the Far East group as well as teaming up with Singapore's largest private property group to expand into the hospitality business in Asia.
In a flurry of late night announcements, Far East Hospitality Trust (FEH Trust) said it, together with a unit of its sponsor, had agreed to acquire Rendezvous Grand Hotel Singapore and Rendezvous Gallery from STC for $285 million.
Separately, Far East Orchard (FEOrchard) and STC inked a deal to jointly pursue and conduct hospitality management and hospitality-related businesses and invest in hospitality-related real estate.
The vehicle, known as Far East Hospitality Holdings, will be 70 per cent owned by FEOrchard with the remaining 30 per cent held by STC.
Upon consummation of the deal, the vehicle will own:
FEOrchard's existing and pipeline hospitality management business;
STC's Australian hospitality assets, which consist of Rendezvous Hotel Perth, Rendezvous Studio Hotel Perth Central and Rendezvous Grand Hotel Melbourne; and
STC's existing hospitality management business operated by Rendezvous Hotels International, comprising 13 hotel management contracts.
The FEOrchard's assets to be acquired are mainly 25 hotel and serviced residence management agreements, comprising 18 existing hotel and serviced residence management agreements currently operated by FEOrchard's wholly-owned subsidiary, Jelco Properties, and seven new and future hotel and serviced residence management agreements;
FEOrchard will also contribute into the joint venture a cash amount of about $76.2 million, which is to be paid to STC.
The joint venture will enable STC and FEOrchard to transform their existing hospitality businesses into one of the largest hotel operations in the Asia Pacific with a scalable and sustainable platform for future growth and expansion, said STC.
The joint venture will initially manage more than 6,000 rooms.
"This new joint venture combines the strengths of two leading hospitality operators," said STC chairman Chew Gek Khim.
"It also 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," she added.
FEOrchard group chief executive and managing director Lucas Chow said: "Once we complete this proposed transaction, we will have an immediate regional footprint that covers mainly Singapore, Malaysia, Australia and New Zealand."
On the sale of the Singapore hotels, Ms Chew said the company is transforming the properties into cash and a stake in FEH Trust. STC will receive $217 million in cash and $68 million in FEH Trust stapled securities.
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