Far East Orchard forms market-leading JV with Toga Group

Set to conquer Australia and New Zealand.

Mainboard-listed Far East Orchard Limited (FEOrchard) entered into the joint venture vehicle to take advantage of growth opportunities in the hotel real estate market in Australia and New Zealand .

In explaining the rationale behind the strategic joint venture (JV), FEOrchard said it is a vertically integrated hospitality operator with the capability to develop its own hospitality properties and manage a significant hospitality management business. Thus, 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.

Mr Lucas Chow, FEOrchard’s Group Chief Executive Officer and Managing Director commented: “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.”

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.

The Toga Group is one of the largest hospitality operators in Australia with hospitality management contracts to operate approximately 6,800 rooms across more than 50 hotels and serviced apartments in Australia, New Zealand, Germany and Denmark. The Toga Group’s hospitality management business operates under four strong and prominent value and mid-market brands, of which, the “Medina”, “Adina” and “Vibe” brands are wholly-owned and the “Travelodge” brand is licensed.

With the expanded platform of hotels and serviced residences across different hospitality brands, FEOrchard will be able to offer, more options to its customers across multiple geographies, while catering to different targeted segments.

The Joint Venture is also expected to bring potential revenue enhancement opportunities, cost savings and greater operational efficiencies from the increase in size and scale of FEOrchard’s overseas operations.

The Joint Venture is also in line with FEOrchard's objectives of delivering long term growth and enhancing the recurring income stream for FEOrchard and its shareholders. This expanded platform will enable FEOrchard to continue growing in the Asia-Pacific region by operating more third party hospitality assets and engaging in cross-selling initiatives between its brands and geographic markets.

FEOrchard and Toga Group will be able to combine their financial resources to pursue more yield accretive acquisitions and growth opportunities, either in hospitality-related assets or hospitality management business, and share their networks to direct new and exciting opportunities to the Joint Venture.