Singapore-listed Orchard Parade Holdings Limited (OPHL), the hotel and property arm of Far East Organization (FEO), is seeking shareholders’ approval to divest three hospitality assets into a real estate investment trust (REIT) to be listed on the SGX.
In a statement, OPHL said this is part of a corporate restructuring exercise to allow the company explore opportunities in the hospitality management and healthcare sectors.
Under the proposed REIT transaction, OPHL will inject Orchard Parade Hotel, Albert Court Village Hotel and Central Square Village Residences into a Far East Hospitality Trust for at least S$702 million.
OPHL will then acquire a 33 per cent stake in the REIT manager and the Trustee-Manager.
OPHL’s chief executive officer and managing director, Mr Lucas Chow, said: “By unlocking the value of OPHL’s Hospitality Assets, we can build up our capabilities to participate more actively in future land tenders and developments.
“OPHL will also benefit from a sustainable and steady recurrent income stream with scalable growth via a share of the REIT manager’s fees.”
In addition, OPHL is also seeking shareholders’ approval to enter into an asset swap to acquire hospitality management business and health-care properties from its parent company FEO.
Through the asset swap, OPHL will acquire a portfolio of medical suites in Novena Medical Centre and Novena Specialist Centre, as well as the entire hospitality management business of FEO.
OPHL said it will be divesting 35 per cent of its 49.5 per cent stake in Yeo Hiap Seng to FEO at a 40.6 per cent premium to the stock’s last traded price to help fund the asset swap transaction.
OPHL has also proposed to change its name to Far East Orchard Limited to better reflect its new positioning.
In addition, it is proposing a special dividend of S$0.12 per share and a dividend in kind of the company’s 14.5 per cent interest in Yeo Hiap Seng.
However, OPHL said it will not proceed with the asset swap with FEO or pay out the proposed dividends if the listing of Far East Hospitality Trust is unsuccessful.
Source : Channel NewsAsia – 13 Jun 2012