CDL Hospitality Trusts acquires hotel in Europe; launches S$255.4m rights issue

Pullman Hotel in Munich is the CDL Hospitality Trusts' first acquisition in continental Europe.
Pullman Hotel in Munich is the CDL Hospitality Trusts' first acquisition in continental Europe.PHOTO: SCREENGRAB FROM GOOGLE MAP

SINGAPORE - CDL Hospitality Trusts (CDLHT) have announced the acquisition of Pullman Hotel in Munich and its office and retail components for €98.9 million (S$153.8 million), which will be fully funded by debt financing.

The deal is accretive with a net property income yield of 5.6 per cent for financial year 2016.

The four-star rated hotel is located in close proximity to major business districts, and is the Trusts' first acquisition in continental Europe.

"Munich is a compelling destination for our first acquisition in continental Europe, allowing CDLHT to benefit from a potential economic recovery in the region through exposure to the largest economy in Europe," said Mr Vincent Yeo, the Trusts' chief executive officer.

In addition, the Trusts have also launched on Tuesday a fully underwritten and renounceable rights issue to raise S$255.4 million. The company said that this is expected to enhance financial flexibility through reduced gearing and increased debt headroom.

The partial repayment of existing higher interest-bearing borrowings will also lower its weighted average cost of debt and further improve its interest coverage ratio, CDLHT said.