Singapore-listed Ascendas Hospitality Trust (SGX:Q1P) announced on 11 May that it has entered into a fixed-term building lease agreement with Sunroute Co. Ltd. for the operation of Osaka Namba Washington Hotel Plaza.
Osaka Namba is a 14-storey economy business hotel with 698 guest rooms and two restaurants.
The agreement will see an uplift of 13% from the existing rent that the trust is currently receiving from the property, said Tan Juay Hiang, CEO of the trust’s managers. “Further, as the rent has been structured to be the higher of the fixed rent or a proportion of gross revenue, it provides stability of cash flow and downside protection while A-HTRUST can also enjoy potential upside in the event of a strong performance by the hotel”, added Tan.
Tan also said that during the process of seeking a new lease for the hotel, the trust was approached by a number of interested parties for the operation of the hotel. “This demonstrated the quality and earning potential of the hotel”, he added.
The fixed-term building lease agreement will commence on 1 January 2016, on a 10-year lease term. The hotel will be renovated and rebranded under the “Sunroute” brand.
Units of Ascendas Hospitality Trust last changed hands on the Singapore Exchange at SGD0.705.