CDL Hospitality Trusts has secured another 10-year lease for its asset in the Maldives known as Angsana Velavaru.

The lease has been arranged between Sanctuary Sands Maldives Private Limited, a wholly-owned subsidiary of CDLHT’s REIT component, and Maldives Bay, a subsidiary of Banyan Tree Holdings Limited.

The existing lease in place with Maldives Bay expires on 31 January 2023.

The terms of the lease are similar to the existing lease and will be for a term of 10 years commencing 1 February 2023, said CDLHT.

The rental formula and management fee terms under the lease are the same as the existing lease entered into between the parties on 4 January 2013.

Under the lease, Sanctuary Sands will be entitled to receive rent payments equivalent to the resort’s gross operating profit minus management fees retained by the lessee, subject to a minimum rent.

Maldives Bay will also pay Sanctuary Sands a top-up amount to make up for any shortfall in rent below the minimum rent for each year.

The aggregate top-up amount for shortfalls in rent over the entire term is subject to a cap which is equivalent to the minimum rent level.

The lease structure provides downside protection for CDLHT and incentivises the lessee to maximise gross operating profit while allowing CDLHT to enjoy the potential upside, the trust added in its statement.

CDLHT was last done on the Singapore Exchange at SGD1.25, which presently implies a distribution yield of 3.26% according to data on the Singapore REITs table.