CDL Hospitality Trusts (CDLHT) has announced that Sanctuary Sands Maldives, a wholly-owned subsidiary of CDL Hospitality REIT has entered into a new lease agreement with Maldives Bay, a subsidiary of Banyan Tree Holdings for Angsana Velavaru.
The existing lease in place with Maldives Bay expires on Jan 31, 2023. The terms of the new lease agreement are similar to the existing lease and will be for a term of 10 years commencing Feb 1, 2023.
The rental formula and management fee terms under the new lease agreement are the same as the existing lease entered into between the parties on Jan 4, 2013.
Under the new lease agreement, Sanctuary Sands Maldives will be entitled to receive rent payments equivalent to the resort’s gross operating profit minus management fees retained by Maldives Bay, subject to a minimum rent.
Maldives Bay will pay Sanctuary Sands Maldives a top-up amount to make up for any shortfall in rent below the minimum rent for each year. The aggregate top-up amount for shortfalls in rent over the entire term is subject to a cap which is equivalent to the minimum rent level.
The lease structure provides downside protection for CDLHT and incentivises Maldives Bay to maximise gross operating profit while allowing CDLHT to enjoy the potential upside, the company said in a statement.
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Shares in CDLHT closed 1 cent higher or 0.8% up on Dec 14 at $1.25.
