Even as Far East Orchard (FEOrchard) expands its portfolio with its proposed plans to move into Australia, it is still committed to the Singapore market. Assuming that the proposed joint venture with Straits Trading
Company (STC) and Toga Group goes through, revenue from the group's hospitality arm will jump from 30 per cent to about 40 per cent of Far East's entire portfolio. Real estate development will constitute the majority of the remaining 60 per cent, said Lucas Chow, FEOrchard's group chief executive.

The majority of the hospitality management's revenue will also start coming from overseas. Currently, about 90 per cent of FEOrchard's revenue comes from Singapore. This is expected to drop to 40 per cent, assuming the resolutions are passed at Tuesday's extraordinary general meeting.Under the proposed joint venture with Toga Group, FEOrchard will acquire a 50 per centstake in the joint venture which will own the hospitality management business of Toga Group, with the option to acquire five hospitality assets in Australia. It also intends to enter a joint venture with STC. The vehicle will be 70 per cent owned by FEOrchard and will see FEOrchard own three other hotelsfrom STC in Australia. It will also acquire STC's RHI hospitality
management business.

"We are still fairly optimistic about Singapore although the Singapore Tourism Board has projected a slower period of growth," he said. "Occupancy rate in Singapore continues to be high in spite of slower growth in terms of visitor arrival."

The company is also optimistic about turning STC's performance around. "The STC portfolio has been underperforming for many reasons... Reason number one is that some of the properties over the last few years have been going through renovation which affected occupancy and revenue... Reason number two is they have very onerous contracts," said Mr Chow. strong track record of turning around properties, we expect that when the three of us come together post‐transaction, Toga will help us to manage the Australian properties," said Mr Chow.

Source: AmFraser