Frasers Hospitality Trust to divest Sofitel Sydney Wentworth for A$315M

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Frasers Hospitality Trust has entered a deal to divest the Sofitel Sydney Wentworth for A$315 million to an unrelated third party, the trust said in a filing to SGX Friday.

Under the deal, FHT will first acquire the freehold revisionary interest in the property from an indirect wholly owned subsidiary of Frasers Property, the trust’s sponsor, for A$10.55 million, FHT said in a filing to SGX.

The sale price is a 34.3 percent premium over the combined price of FHT’s existing interest in the Sofitel Sydney Wentworth of A$234.55 million and the freehold revisionary interest, the filing said. The consideration is also 12.1 percent above the independent valuation of A$281 million as of 30 September on a freehold basis, the filing said.

The property is an iconic five-star heritage listed hotel located in the central business district of Sydney, Australia; it has 436 guest rooms and suites over 17 levels.

“The divestment is in line with our active portfolio management strategy to periodically evaluate divestment opportunities to recycle capital for better returns,” Eu Chin Fen, CEO of the trust’s manager, said in the statement.

“Despite the ongoing Covid-19 pandemic, we have achieved an attractive sale price for the asset. Our title re-structuring has enabled the unlocking of a value greater than if Sofitel Sydney Wentworth had been sold as a leasehold property,” she said.

She noted Sydney is expected to face a “significant increase” in room supply, especially in the upper upscale and luxury segments, which would have directly competed with the property just as the market is gradually recovering from the Covid-19 pandemic.

The proceeds will be used to repay outstanding loans, or for distributions to unitholders or to finance general corporate and working capital requirements, the trust said.