First Sponsor buys Dutch property for hotel development

Singapore

PROPERTY developer First Sponsor Group on Wednesday said it has signed a conditional sale and purchase agreement with Hoog Catharijne Mall of the Netherlands, a private company, to buy the third floor to ninth floor of the Poortgebouw Hoog Catharijne. This is a leasehold property located at the Catharijne Esplanade 13 in Utrecht, the Netherlands. Connected to the Utrecht central station, it is a newly-built shell building with a total lettable floor area of about 11,604 sq m. First Sponsor plans to develop the space into two hotels. The purchase price for the acquisition is about 26.38 million euros (S$40.89 million).

Of the two hotels, one will be under the Hampton by Hilton brand or a brand of similar standing, and the other under the Crowne Plaza brand or a brand of similar standing. They will yield about 192 rooms and 128 rooms respectively.

First Sponsor will contribute up to 12 million euros to fund the development works. If more funds are needed, Dutch-based investment, development and management group Borealis Hotel will provide up to another two million euros.

If still more funds are needed, First Sponsor will lend Borealis Hotel up to two million euros at an interest rate of 7 per cent per annum to fund the development costs.

First Sponsor has also agreed to lease the hotels to Borealis Hotel for an initial term of 25 years, which will be automatically extended for two subsequent terms of 10 years each.

The Borealis Group focuses on the hospitality and leisure market in major capital cities, and currently develops and operates projects of Hilton, IHG, AccorHotels and Marriott in Amsterdam, Antwerp, Brussels, The Hague, Paris and Utrecht.

The vendor of the hotel transaction is a wholly-owned unit of mall operator Klépierre SA which is listed on the Euronext Paris and is a major player in continental Europe's retail property market.

First Sponsor said: "The directors believe that this acquisition and the rental income from the leasing arrangement under the lease agreement are beneficial to the group and will help to expand its recurring income base in the Netherlands."

In its latest annual report, it said that its Dutch leasing properties, with a lettable floor area of 92,293 sq m, occupancy of 90 per cent and a weighted average lease term of about nine years as at Dec 31, 2016, generate a net property income of more than S$24 million per annum.

First Sponsor will finance the purchase by drawing down on its existing unsecured credit facilities.

The counter closed half a cent higher at S$1.33.