Far East Hospitality Trust (FEHT) has entered into an agreement with The Straits Trading Company Limited (STC) to acquire Rendezvous Grand Hotel Singapore and Rendezvous Gallery (70-year leasehold estate) for an estimated total cost of acquisition of S$270.1m.
The acquisition will be financed by the proposed issue of new stapled securities in FEHT to STC (S$68.0m), the Sponsor (S$67.8m), as well as debt facilities (S$132.2m). The pro forma effects of the acquisition for FY12 (27 Aug-31 Dec) would have been an increase in DPU from 2.09 S-cents to 2.12 S-cents.
Pro-forma effect on NAV per stapled security as of 31 Dec 2012 would have been an increase from 97 S-cents to 98 S-cents. This is Far East HTrust’s first acquisition since its initial public offering in August 2012. The master leasee will be a member of the Far East Organization group of companies.
We maintain a HOLD rating but place our fair value of S$1.05 under review.
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