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ASCENDAS Hospitality Trust, a wholly-owned subsidiary of Ascendas Hospitality Business Trust, has entered into a fixed-term building lease agreement with Japanese hotel operator Sunroute for the operation of Osaka Namba Washington Hotel Plaza, one of the 12 hotels in its portfolio.
The lease agreement will commence on Jan 1, 2016, on a 10-year lease term and the hotel will be renovated and rebranded under the "Sunroute" brand.
Tan Juay Hiang, CEO of Ascendas Hospitality Fund Management, said in a note that the agreement will see an uplift of 13 per cent from the existing rent that Ascendas Hospitality Trust is currently receiving in respect of the hotel.
He added that the rent has been structured to be higher of the fixed rent or a proportion of gross revenue to provide stability of cashflow and downside protection and also enjoy the potential upside in the event of a strong performance by the hotel.
"The hotel will undergo renovation to give it a temporary look. It will also be repositioned to appeal to young travellers and to better meet the changing demands of the modern-day business travellers," Mr Tan added.
On Monday, Ascendas Hospitality Trust closed trading down 0.704 per cent at S$0.705.