CDL Hospitality Trusts (CDLHT) has acquired Pullman Hotel Munich in Germany, and its office and retail components for €98.9 million (S$154 million). The four-star hotel, which is near the major business district, is the company’s first entry into continental Europe.

"The acquisition allows us to penetrate a highly sought-after hospitality market while enjoying a spread between the attractive property yield and ultra-low borrowing rates," said CDLHT Chief Executive Officer, Mr Vincent Yeo.

"This exercise will strengthen our balance sheet and enhance financial flexibility, allowing (the trust) to pursue future growth opportunities through acquisitions and asset enhancement initiatives," added Mr Yeo.

CDLHT said the acquisition is expected to enhance the company’s financial flexibility through reduced gearing. The partial repayment of existing borrowings will also lower its weighted average cost of debt and further improve its interest coverage ratio.

“Once our acquisition in Munich and equity fund raising are completed, CDLHT’s portfolio will see the addition of two new European properties in 2017 and our total valuation of the portfolio will increase from S$2.4 billion at end 2016 to S$2.7 billion,” said Mr Yeo.

CDLHT recently acquired The Lowry Hotel in Manchester, UK on 4 May 2017.