Page 31 - ar2012

STRATEGIC ALLIANCE WITH
MEMBERS OF THE FAR EAST
ORGANIZATION GROUP
The fourth initiative was announced on
15 April, 2013, when Straits Trading
executed two transactions. The first
transaction comprised the signing of
an agreement with Far East Hospitality
Trust (FEHT) and Serene Land Pte Ltd
(a member of the Far East Organization
group) for the injection of Rendezvous
Grand Hotel Singapore and Rendezvous
Gallery into the FEHT. The total transaction
was valued at S$285 million, comprising
S$217 million in cash and S$68 million in
FEHT securities. Through refurbishments,
asset enhancements and rebranding,
the value of Rendezvous Grand Hotel
Singapore and Rendezvous Gallery has
increased by S$117 million since 2009.
This transaction enables us to realise
and unlock the value in these assets.
The second transactionwas the signing of
aJoint Venture ImplementationAgreement
(JVIA) between Straits Trading and Far
East Orchard Limited (FEOrchard) to
establish a 30/70 joint venture to pursue
and conduct hospitality management
and hospitality-related businesses and
investments in real estate used primarily
for hospitality purposes.
Under the termsof theJVIA, StraitsTrading,
with a 30% stake, will contribute its three
hotel properties namely Rendezvous
Grand Hotel Melbourne, Rendezvous
Hotel Perth and Rendezvous StudioHotel
Perth Central, and 13 hotel management
contracts and leases to the Joint Venture
Company (JVCo) and receive net cash
of S$56.2 million. FEOrchard in turn,
will contribute 25 hotel and service
residence management agreements
and contribute cash of S$97.2 million
to the JVCo.
With these two transactions, we are able
to transformour hospitality business from
a portfolio of 13 hotels with approximately
2800 rooms into ameaningful investment
in a scalable and sustainable platform,
comprising 30 properties with over 6000
rooms, that is well positioned for further
growth and expansion in Singapore,
Australia and the Asia Pacific.
These strategic developments in the
hospitality division are an illustration of
Straits Trading’s strategy of transforming
its current ownership of assets into stakes
in businesses that are engines of growth.
The Straits Trading Company Limited ANNUAL REPORT 2012 29 /