This article is from the Australian Property Journal archive
TOGA Group and Investec Bank have sold five hotels in Sydney, Brisbane, Darwin and Adelaide into a $450 million venture fund which Toga has formed with Singapore's Far East Orchard Limited, to create one of the largest hospitality businesses in Australia.
The joint venture comes hot on the heels of FEOrchard forming another JV with Singapore’s hotel owner and operator Straits Trading Company, to create one of the largest hotel groups in Asia Pacific. The JV, Far East Hospitality Holdings, was kick started with three properties, the Rendezvous Grand Hotel Melbourne; Rendezvous Studio Hotel Perth Central and Rendezvous Hotel Perth as well as the management of more than 6,000 rooms.
FEOrchard’s CEO Lucas Chow said the deal with Toga Group will allow the company to become one of the largest hospitality operators in Australia.
For its share, FEOrchard will tip in $225 million for a 50% interest in the JV.
Toga and its partner Investec Bank have sold a 50% stake in five hotels to the JV, namely the Adina Apartment Hotel Sydney Harbourside; Adina Apartment Hotel Adelaide Treasury; Adina Apartment Hotel Brisbane; Vibe Hotel Sydney; and Travelodge Mirambeena Resort Darwin.
The JV will own the hospitality management business of Toga Group, which includes more than 50 contracts totalling 6,800 rooms and five more are in the pipeline, with the option to acquire five hospitality assets in Australia.
“We are delighted to enter into the joint venture partnership with Toga Group and start a new chapter in Australia together. By bringing two leading hospitality operators together into this joint venture, we believe it will generate significant synergies, and be one of the key growth drivers for our hospitality management business going forward,” Chow said.
“As a vertically integrated hospitality operator with the capability to develop its own hospitality properties and manage a significant hospitality management business, FEOrchard has been promoting its portfolio of hospitality brands and pursuing new third party management contracts that would add growth and recurring income to FEOrchard, allowing it to expand and diversify its existing hospitality management portfolio regionally.
“The joint venture presents FEOrchard with an excellent opportunity and an effective platform to gain a strategic foothold in Australia, a key tourism market in the Asia Pacific. It will also further extend its hotel management and ownership business beyond Singapore and Malaysia, into Australia, New Zealand, Germany and Denmark and help FEOrchard establish itself as a regional hospitality owner and operator with a sizeable overseas network,” he added.
Far East Hospitality CEO Arthur Kiong said the joint ventures with Straits Trading Company and Toga, will see the company’s portfolio grow from approximately 3,600 rooms under management across 18 hotels and serviced apartments to a combined portfolio of more than 13,000 rooms across 80 properties.
“The additional portfolio will also make us one of the largest operators in Australia and give us the scale and operational synergies to operate efficiently there. Furthermore, we believe this proposed JV will further increase awareness of FEOrchard’s hospitality brands in the regional markets and provide cross-selling opportunities to FEOrchard’s existing hospitality portfolio,” Kiong said.
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