Page 18 - ar2012

CDL Hospitality TrustS
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GROWTH FROM ACQUISITIONS
Delivering Growth
On 4 January 2013, CDLHT announced the acquisition
of Angsana Velavaru resort in the Maldives (the
“Angsana Velavaru”) for a purchase consideration of
US$71.0 million (1) (approximately S$86.8 million) (2)
from the Banyan Tree Group. The acquisition was
successfully completed on 31 January 2013, marking
CDLHT’s entry into the attractive Maldives market.
The Angsana Velavaru, valued at US$72.5 million,
is located in the South Nilandhe Atoll and is easily
accessible by seaplane from the Male International
Airport. The 113-villa property, which consists of
79 beachfront villas and 34 water villas, provides
guests with the opportunity to enjoy two distinct
experiences at one resort.
The transaction is a unique opportunity for CDLHT
to participate in the buoyant hospitality sector of the
exclusive Maldives market, which RevPAR is one of
the highest in the world (3) . In line with management’s
strategy, this acquisition allows CDLHT to capitalise
on the trend of rising afuence of Asian travellers and
the growing demand for premium resort experience.
RevPAR (US$) of Top 3 Markets Globally
Market 2012 2011
Maldives 393 383
Paris 260 261
New York 211 199
Source : STR Global
As part of the transaction, CDLHT also entered into a
lease arrangement with the vendor, Banyan Tree Group,
where the latter will continue to operate the property
under the Angsana brand for a 10-year period.
The pro forma net property income yield of the property
for the year 2012 is 9.7% (4), which compares favourably
to CDLHT’s implied property yield of 6.1% (5) based on
closing price of S$1.880 as at 31 December 2012.
s
Lease Terms Provide Rental Protectionwith
a Substantial Share of the Upside
The 10-year lease arrangement with the Banyan Tree
Group provides CDLHT with a defensive long term
streamof income. It is structuredwith a rental protection
mechanism which provides CDLHT with a minimum
rent of US$6.0 million (subject to a reserve of US$6.0
million) (6). The minimum rent will provide a minimum
net property income yield of approximately 7.0% (7),
based on the purchase consideration of US$71.0 million.
After the acquisition, the proportion of CDLHT’sminimum
rental revenue (8) will increase from48.0%to49.7%, adding
to the robustness of CDLHT’s revenue base.
In addition, the lease arrangement has a tiered hotel
management fee which provides further downside
protection to CDLHT, and incentivises the lessee to drive
growth in gross operating proft while allowing CDLHT
to enjoy a substantial share of the upside.
The resort is expected to beneft from the trend of
more afuent Asians travelling abroad underpinned by
the growth in Chinese outbound travel, as well as the
eventual recovery of the traditionally strong European
markets. Moreover, subject to further study, there are
potential upside opportunities fromasset enhancements
and also to develop additional villas for the Angsana
Velavaru as the recent regulatory change allows for the
percentage of built up area for tourist facilities to be
increased from 20% to 30% of total land area.
Gross Revenue for
FY2012 (BeforeAcquisition)
ProFormaGross Revenue for
FY2012 (Post Acquisition)
Minimum Rent
Variable Rent
48.0% 52.0% 49.7% 50.3%
s
InOcean Pool Villas, Angsana Velavaru, The Maldives