Singapore CDL Hospitality Trusts is selling the Mercure Brisbane and Ibis Brisbane for A$77 million (S$80 million), the stapled group announced yesterday.
The sale price represents an exit yield of 5.3 per cent on the fixed rental, a 43.4 per cent premium over the A$53.7 million original purchase price and a 10 per cent premium over an independent valuation of A$70 million.
The buyer is CR Hotel Target, an independent third party. The deal is expected to be completed next month.
The 194-room Mercure and 218-room Ibis are connected properties within a single site across from the Performing Arts Complex Centre and Brisbane Convention and Exhibition Centre in Brisbane.
The property was acquired on Feb 18, 2010, with a master lease that expires on April 30, 2021.
The proceeds from the sale will be used mainly to repay existing borrowings, although some will also be set aside for distributions to holders of the trust's stapled securities in fiscal year 2018 to mitigate the net effect of the divestment on distributable income.
The proceeds may also be used to fund future acquisitions if opportunities arise.
"In line with our proactive asset management strategy, the divestment of Mercure Brisbane and Ibis Brisbane allows us to realise the underlying value of these assets and create further debt headroom to continue to actively pursue acquisitions in other markets with stronger growth trajectory, so as to enhance returns for our stapled security holders," said Mr Vincent Yeo, chief executive of the trust's managers.