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Far East Hospitality Real Estate Investment Trust (Far East H-REIT) has agreed to purchase a 314-room luxury hotel in Tanjong Pagar for $210 million, revealed an SGX filing on Friday (12 January).
“Oasia Hotel Downtown is an award-winning, quality asset which will enhance our existing portfolio. Given its strategic location and proximity to the Central Business District (CBD), the hotel is ideal for business travellers,” said the trust manager’s CEO Gerald Lee.
Far East H-REIT is acquiring the 65-year leasehold property from Far East SOHO Pte Ltd, through a conditional sale and purchase agreement. In this deal, it has exercised its right of first refusal granted by the trust sponsor, Far East Organization group.
Oasia Hotel forms part of a 27-storey hotel-cum-office project that is situated in an area emerging as a new property hotspot. It is also a short walk from Tanjong Pagar MRT Station, while Changi Airport is 30 minutes away by car.
The property opened on 18 April 2016. Its facilities include a 24-hour gym, meeting rooms, restaurants and a bar, as well as infinity and rooftop pools. In addition, it is a recipient of the prestigious SG Mark Platinum accolade and the Urban Land Institute’s Global Awards for Excellence in 2017.
The trust revealed that the deal will be financed by debt facilities and proceeds from Far East Hospitality Trust’s distribution reinvestment plan (DRP). Moreover, the purchase consideration represents the lower end of two independent valuations by Knight Frank and Savills Valuation and Professional Services.
The seller will also be entitled to an additional $15 million worth of stapled securities if the property’s net property income does not fall below $9.9 million for two consecutive fiscal years from the completion of the deal until 31 December 2023. This is known as the earn-out arrangement.
Upon completion of the transaction, Oasia Hotel will be leased to Far East SOHO for an initial term of 20 years with an option to renew for another 20 years under a master lease agreement.
The transaction, including the earn-out and master lease arrangements, requires the approval of the stapled security holders of Far East H-Trust, which comprises Far East H-REIT and Far East Hospitality Business Trust (Far East H-BT).
This article was edited by Keshia Faculin.
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