City Development Hotel Trust signs new lease with Millennium Hilton International Hotel | Lianhe Zaobao
The Urban Development Hotel Services Trust subsidiary has signed a new lease with Millennium & Copthorne Hotels International subsidiary to continue operating the Auckland Millennium Hotel. The new lease takes effect from November 24 and is for a term of five years, with an option to renew for an additional five years. Rent is charged based on the hotel's net operating profit, with a minimum rent guarantee each year. This arrangement provides downside risk protection for the trust and allows for sharing in the upside performance of the hotel
City Developments Limited Hotel Trust's subsidiary signed a new lease agreement with Millennium & Copthorne Hotels' subsidiary to continue operating the Grand Millennium Auckland.
City Developments Limited Hotel Trust (CDLHT) announced this news after the market closed on Monday (November 24) on the Singapore Exchange.
The new lease takes effect from November 24 this year, lasting for five years, with an option to renew for another five years upon mutual agreement. The leasing framework is consistent with the last year of the previous leasing agreement between the two parties.
According to the lease, the landlord will collect rent based on the hotel's net operating profit, while a minimum annual rent of NZD 2 million (approximately SGD 1.46 million) is guaranteed.
Further Reading
City Developments sold 88 private residential units in Q3, with sales dropping to SGD 313.2 million City Developments Limited Hotel Trust establishes a SGD 1.5 billion multi-currency bond issuance program
The trust management company stated that this arrangement provides certain downside risk protection for the trust while allowing it to share in the upside performance of the hotel.
The Grand Millennium Auckland is located in downtown Auckland, featuring 453 guest rooms, making it one of the largest hotels in Auckland, and it has large conference facilities. The hotel has undergone extensive renovations, with remaining work expected to be completed this year.
Since Millennium & Copthorne Hotels is a subsidiary of City Developments (CDL), this lease is considered a related party transaction. However, as the total contract value accounts for less than 3% of the group's net tangible assets and is signed on fair commercial terms, shareholder approval is not required.
The trust's share price rose 0.61% on Monday, closing at SGD 0.825
