SINGAPORE (Nov 21): The managers of CDL Hospitality Trusts (CDLHT) is looking to acquire the 240-room W Singapore – Sentosa Cove for $324.0 million.
The purchase consideration represents a 3.1% net property income (NPI) yield. On a pro forma FY2018 basis, the proposed acquisition is expected to result in a 0.9% DPS accretion, the manager says in a filing on Thursday.
The purchase consideration is in line with the hotel’s independent by Knight Frank, and lower than the valuation by Colliers.
The managers intend to fund the proposed W Hotel acquisition via debt financing and internal resources, which includes the proceeds from the divestment of Novotel Singapore Clarke Quay (NCQ), which was also announced on Thursday.
The managers of CDLHT are divesting its entire stake in Novotel Clarke Quay for $375.9 million to a consortium including joint venture vehicles of CDL, Capitaland, and its sponsor, the parent company of Millennium & Copthorne Hotels (M&C).
The forward purchase agreement will also see CDLHT acquire the new, fully developed and fitted out hotel when the redevelopment is completed.
See: City Dev, CapitaLand lead consortium to redevelop Liang Court site at Clarke Quay
“As proceeds from the divestment of NCQ will not be tied up during the development of the new hotel, we will be able to efficiently recycle capital for acquisitions or other uses,” says Vincent Yeo, CEO of the managers. “The proposed W Hotel acquisition represents a rare opportunity to secure a high quality, luxury hotel in the tightly-held Singapore market.”
CDLHT’s managers will be convening extraordinary general meetings (EGMs) to seek approval for the proposed W Hotel acquisition and NCQ redevelopment transaction from security holders. The proposed acquisition and proposed redevelopment transaction are not inter-conditional.
“We strongly believe in the longterm value of hospitality real estate in Singapore and are pleased to secure two attractive opportunities to increase CDLHT’s investment in our home market,” says Yeo. “We are pleased to be able to tap on our blue-chip parentage for development expertise and pipeline assets.”
As at 4.58pm, units in CDLHT are trading 1 cent higher, or up 0.6%, at $1.60.
