Far East Orchard boosts core AUM to $3.9b with FEHT deal

Stake in the FEHT managers will increase to 75%.

Far East Orchard will acquire a 42% stake in FEO Hospitality Asset Management (FEOHAM) and FEO Hospitality Trust Management (FEOHTM) for $28.3m.

FEOHAM manages Far East Hospitality Real Estate Investment Trust (Far East H-REIT), whilst FEOHTM is the trustee-manager of Far East Hospitality Business Trust (Far East H-BT). Together, they form Far East Hospitality Trust (FEHT).

The acquisition will raise Far East Orchard’s stake in the managers from 33% to 75%.

FEO Asset Management currently holds the remaining 67%.

The $28.3m consideration will be paid in cash and funded through Far East Orchard’s internal resources.

The deal will increase Far East Orchard’s core assets under management by about 86% to approximately $3.9b and position it as FEHT’s main sponsor.

This supports its target of at least $5b in core assets under management (AUM) by FY2030.

The acquisition is expected to immediately increase pro forma earnings per share by 3.7% and raise recurring management fees as FEHT grows, supporting dividend growth.

It will also strengthen Far East Orchard’s fund management platform by integrating its lodging business with FEHT alongside its existing private fund platform.

The combined platform will support capital recycling and provide additional channels for capital-light AUM and fee income growth.

“By strengthening our alignment with FEHT, we are expanding our recurring income base and broadening the channels through which we can grow in a capital-efficient manner, including capital recycling and capital-light AUM growth alongside our existing private fund platform,” Alan Tang, group chief executive officer of Far East Orchard, said.

“It strengthens FEOR's integrated lodging platform and positions it well to deliver on its FEOR30 strategy and create sustainable long-term value for shareholders,” added Jonathan Ng, chief executive officer of Far East Organization.

After completion, Far East Orchard said it will support the managers in identifying opportunities to grow FEHT and create sustainable value for its stapled securityholders.

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