Far East Orchard Ltd., a unit of Singapore’s largest closely held developer, is considering listing a hospitality trust in Australia to hold assets it acquired in the country this year.
“We definitely are looking at the possibility,” Lucas Chow, Chief Executive Officer at Far East Orchard, said in an interview in Singapore yesterday. “One way to recycle the capital is to inject the asset into a REIT.”
Far East Orchard, which got almost all its revenue from the island-state before it entered Australia for the first time with two joint ventures, is expanding in the Pacific nation to capitalize on growing tourist arrivals. The S&P/ASX 200 A-REIT Index has gained 7.3 percent this year, compared with a 5 percent drop in the FTSE Strait Times Real Estate Investment Trust Index.
Far East Hospitality Trust, the company’s Singapore-listed REIT, raised S$717.6 million ($580 million) last year. The trust initially had 11 properties, seven of which were hotels and four that were serviced residences in the island-state, according to its offer document last year.
Far East Orchard is targeting 60 percent of revenue from outside Singapore following the joint ventures with Toga Pty and The Straits Trading Co. announced last year, Chow, 60, said in a press conference in July, without specifying a time frame.
Overseas arrivals to Australia rose 6.7 percent to 530,900 in August from a year earlier, according to Tourism Australia. The biggest increase in visitors was from China, Singapore and Taiwan, the data showed.
The company is also seeking to develop real estate in Australia, Chow said. Sydney, Melbourne and Perth are among cities the company would target initially. Far East Orchard’s presence in Sydney and Melbourne through its hotel venture, and Perth’s proximity to Southeast Asia makes the cities attractive investments, he said.
Far East Orchard, which owns a 70 percent stake in a joint venture with The Straits Trading, will own three hotels in Australia, according to the company. It bought a 50 percent stake in a venture with Toga for A$225 million ($216 million). Toga manages more than 50 hotels and serviced residences across Australia, New Zealand, Germany and Denmark under brands including Adina and Vibe.
Far East Orchard operates about 80 properties with more than 13,000 rooms, according to a presentation by the company in July.