First Sponsor buys Netherlands property for hotel development

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.

The leasehold property is 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 square metres. First Sponsor plans to develop it 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, the hotel operator 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.

The Borealis Group is a Dutch-based investment, development and management group of companies that focuses on the hospitality and leisure market in major capital cities. It currently develops and operates projects of Hilton, IHG, Accor and Marriot in Amsterdam, Antwerp, Brussels, The Hague, Paris and Utrecht.

The vendor of the hotel transaction is a wholly-owned unit of Klépierre SA which is listed on the Euronext Paris and is a major player in continental Europe's retail property market with shopping centres in 57 cities and 16 countries.

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."

First Sponsor will finance the purchase price through the drawdown of its existing unsecured credit facilities.