Far East Orchard sells Rendezvous Hotel Perth Central for $16.5m

The expected gain from the disposal is $5.4m.

Far East Orchard Limited announced the sale of Rendezvous Hotel Perth Central (RHPC) and its business for $16.5m.

RHPC is a 103-room freehold hotel property located at 24 Mount St, Perth WA 6000, Australia. It is owned by Far East Hospitality Properties (Australia) Pte Ltd (FEHPA) and leased to Rendezvous Hotels (Australia) Pty Ltd (RHA), both subsidiaries of Far East Orchard. 

In a bourse filing, the group said “the sale price was arrived at after arm’s length negotiations and on a willing-buyer and willing-seller basis, after taking into consideration: (a) the prevailing market conditions and (b) the valuation."

FEHPA and RHA have granted an option agreement to buyers Chesterfield Property Group Pty Ltd and Mountstreet Operations Pty Ltd, Far East Orchard noted. The buyers may exercise this from 6 May 2024 to 30 August 2024.

Under the option, the buyers paid an option fee of $44,500. This will be set off against the $823,250 deposit upon the exercise of the deal and the execution of the sale and purchase agreement. 

If the buyers do not exercise the option and it lapses, the option fee shall be forfeited and be retained by FEHPA and RHA, Far East Orchard noted.

The company explained that the disposal is “in line with the company’s proactive asset management strategy, which includes capital recycling of its purpose-built student accommodation & hospitality assets at suitable market conditions, where they fetch a good value.”

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Selling the property will allow the group to realise its value, and improve capital allocation and optimise returns for the shareholders, it noted. The improved liquidity would also give access to future business opportunities, it added.

Far East Orchard said the gain on disposal of the property will be around $5.4m taking into consideration net sale proceeds and book value. This will be reflected in its consolidated statement of comprehensive income for the financial year ending 31 December 2024