Far East Consortium Said to Mull S$500M Singapore REIT Listing

Hong Kong developer Far East Consortium International Ltd (FEC) is reportedly mulling a Singapore listing for a real estate investment trust that could raise up to S$500 million ($365 million). The potential sale of trust units, which could occur as soon as the first half of 2020, would be backed mainly by hotels under FEC’s Dorsett Hospitality brand.

FEC confirmed that it is “considering a potential spin-off and separate listing” of certain hospitality properties in Australia, Singapore, Malaysia and the UK, according to a filing to the Hong Kong stock exchange last Thursday. The assets would be listed on an overseas securities exchange in the form of a stapled trust group comprising a REIT and a business trust, although the possible deal is still at an early stage, the statement adds.

The announcement followed a Bloomberg report, citing sources familiar with the matter, which indicated that FEC is working with advisers on the potential REIT listing. FEC, which has a market cap of HK$8.8 billion, operated 28 hotels with about 7,500 rooms as of March, with another 15 hotels under development.

The news comes amid a flurry of REIT activity in Singapore this year, including Frasers Logistics & Industrial Trust’s just-announced proposal to purchase Frasers Commercial Trust, which would create a S$4.2 billion ($3 billion) merged vehicle. Singapore-listed REITs have spent a total of S$23.1 billion ($16.9 billion) to acquire assets this year — triple the previous record reached in 2014, according to data from Bloomberg.

Hong Kong Consortium Boosts Portfolio

FEC has grown rapidly in recent years. In September, the company’s Dorsett Hospitality International division teamed up with Hong Kong investment bank AMTD Group to purchase a 268-room hospitality asset in downtown Singapore from developer OUE. The hotel and serviced residence property traded for S$289 million ($212 million).

Closer to home, FEC won a tender for a hotel and commercial parcel at Hong Kong’s former Kai Tak airport for HK$2.45 billion ($312 million) in the August. In the same month, it snapped up a 20-acre (81,000 square meter) residential plot in central Manchester, England for an undisclosed sum, where the company will build over 1,000 new homes.

In April 2018 FEC added 572 hotel rooms in Germany, Austria and the Czech Republic to its portfolio by acquiring Trans World Corporation (TWC). The company’s operating hotels are currently spread across Hong Kong, mainland China, Singapore, Malaysia, Australia, the UK and continental Europe, with a development pipeline that includes two Ritz Carlton properties in Melbourne and Perth, Australia.

Dorsett Hospitality International operates three brands: Dorsett Hotels & Resorts (upscale and mid-scale), d.Collection (boutique), and Silka (value-led).