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annual report 2012
05
for its acquisitions. In addition, H-REIT can seek
partnership and co-operation opportunities with
M&C as it expands globally.
• Opportunities arising from divestment of assets by
hospitality service providers who are increasingly
looking to free up capital for business expansion
and investment funds that have a fnite period to
dispose acquired assets.
• Opportunities arising from divestment of assets
by owners under fnancial stress in an environment
where capital for hospitality investments remain
relatively scarce.
• Opportunities to acquire under-performing assets
with turnaround potential by implementing value-
added strategies such as re-fagging, management
change and asset enhancements.
Capital And Risk Management Strategy
The H-REIT Manager intends to use a combination of
debt and equity to fund future acquisitions and property
enhancements such that it is within the “Aggregate
Leverage” limit set out in Appendix 6 of the Code
on Collective Investment Schemes, as applicable to
property funds (the “Property Funds Appendix”).
The objectives of the H-REIT Manager in relation to
capital and risk management are to:
• maintain a strong balance sheet and remain
within the Aggregate Leverage limit set out in
the Property Funds Appendix;
• minimise the cost of debt fnancing;
• secure diversifed funding sources from both
fnancial institutions and capital markets as H-REIT
grows in size and scale; and
• manage the exposure arising from adverse market
movements in interest rates and foreign exchange
through appropriate hedging strategies.
Active Asset Management
The H-REIT Manager actively engages its master
lessees/hotel management companies, leveraging on
H-REIT’s economies of scale and its relationship with
M&C, which has extensive experience in the hospitality
industry, to maximise the operating performance
and cash fow of the assets. In addition, it seeks to
optimise space utilisation through implementation of
various asset enhancement initiatives.
ABOUT HBT
HBT is currently dormant.
HBT’s Strategy
HBT will become active if any of the following occurs:
• It is appointed by H-REIT, in the absence of any
other master lessee(s) being appointed, as a
master lessee of one of the hotel assets in H-REIT’s
portfolio at the expiry of the lease term. The
intention is for HBT to appoint professional hotel
managers to manage these hotels.
• H-REIT acquires hotels in the future, and, if there
are no other suitable master lessees, H-REIT will
lease these acquired hotels to HBT. HBT will then
become a master lessee for these hotels and will
appoint professional hotel managers to manage
these hotels.
• It undertakes certain hospitality and hospitality-
related development projects, acquisitions and
investments which may not be suitable for H-REIT.
Club Lounge, Novotel Singapore Clarke Quay