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FIRST Sponsor Group Limited is making its first foray into Germany in partnership with its key shareholders City Developments Limited (CDL) and Tai Tak Estates Sdn Bhd to acquire the Le Méridien Frankfurt Hotel in Germany for about 85 million euros (S$135.9 million).
On Thursday, the mainboard-listed firm said in a joint press release with CDL and Tai Tak that it has, through a joint venture partnership, on Wednesday entered into a sale and purchase agreement for the proposed acquisition of the hotel.
The acquisition is expected to be completed in late December 2017 or early January 2018.
Calvin Ho Han Leong, First Sponsor chairman, said: "First Sponsor has successfully diversified from a China centric real estate player to become a significant property player in the Netherlands since entering the Dutch market in 2015."
Kwek Eik Sheng, CDL chief strategy officer and head of Asset Management, believes that the demand for hotels in Frankfurt will grow thanks to Brexit, as businesses including banks are moving their operations and activities there.
"At the same time, it will also enable CDL to enhance our recurring income stream and enlarge our geographical footprint for strategic diversification," he said.
The Le Méridien Frankfurt Hotel is leased to MHP Parkhotel GmbH with a lease expiry date of May 31, 2040 and is operated under the Le Méridien brand on the basis of a franchise granted by Starwood.
It is a freehold property that is located near the main train station in the Frankfurt district of Bahnhofsviertel - the city centre of Frankfurt - and has an aggregate land size of about 4,405 square metres.
Earlier this year, CDL entered the Munich market through CDL Hospitality Trusts' acquisition of Pullman Hotel Munich.
CDL Hospitality Trusts had also bought The Lowry Hotel in Manchester in May for about £52 million.
Shares of CDL closed 10 cents lower to S$11.78 on Wednesday before the announcement, with First Sponsor's shares closing one cent lower to S$1.38.