CDL Hospitality Trusts (CDLHT) will promote Novotel Singapore Clarke Quay, part of a Liang Court website for redevelopment, for $375.9 million and make an up-to-$475 million forward purchase of a brand new resort that will be part of this new integrated improvement.
In a bourse submitting on Thursday (Nov 21), CDLHT said it’ll also purchase W Singapore resort at Sentosa Cove for about $324 million.
The 403-key Novotel resort is going to probably be sold to a consortium headed by City Developments Limited (CDL) and CapitaLand, and that also comprises Ascott Residence Trust.
CDLHT will get about $369.3 million in net profits from the sale, which is potentially used for the repayment of existing debt, distributions to security holders and financing potential acquisitions, including the W Hotel Acquisition.
It’s also $7.2 million or 1.9 percent greater than individual valuer Colliers International Consultancy & Valuation’s assessment, and $5.4 million or 1.4 percent greater than the valuation by another hired independent valuer, Knight Frank.
The forward purchase is going to probably be for $475 million or 110 percent of the new resort’s development costs, whichever is lower, CDLHT said
It’ll be paid for in cash over four tranches, and financed through debt financing, together with the actual way of financing to be decided closer to the conclusion when payment is expected.
The sale of all Novotel is anticipated to finish in April 2020, whilst purchase of this new resort, which is very likely to have 460 into 475 keys and a 15,541 sq m GFA, will likely be finished in 2025.
The consortium purchasing Novotel has plans for an integrated improvement on the Liang Court website, and the brand new resort is going to be a part of that.
Additionally, it will have a new 99-year lease, and is anticipated to fall beneath Marriott International’s Moxy resort brand, a lifestyle boutique resort concept that appeals to next-gen travellers, such as millennials.
CDLHT will purchase it together with internal funds, potentially including profits from Novotel’s sale and debt financing.
The purchase is expected to finish in early 2020.
All of the deals are subject to various requirements, including approval from CDLHT’s stapled securities holders and also the relevant authorities.
CDLHT’s managers will probably hold extraordinary general meetings in Jan 2020 to find approval from security holders.
The deals will enable CDLHT to penetrate the lifestyle resort market at several tiers or cost points in Singapore amid increasing global demand for lifestyle resorts with powerful identities and story-telling potential, said CDLHT managers.
“Throughout the W Hotel and the brand new resort, CDLHT may also gain from continued long-term vulnerability to Singapore, that’s the most visited town in the world and attracts both leisure and business travel, given its status as an international financial center and famous MICE destination,” they added.
CDLHT is going to be able to conserve its majority Singapore portfolio weightage throughout the W Hotel even after divesting Novotel.
As at Sept 30, together with the acquisition of this W Hotel together with the divestment of Novotel, and before the acquisition of this new resort, CDLHT’s pro forma gearing could be reduced at 35.3 percent.
It said that this leaves it ample debt headroom of $512.7 million, assuming a 45 percent gearing limitation for CDLHT as a whole.
CDLHT now has six resorts comprising 2,718 rooms in Singapore. After conclusion of the latest projected deals, it’s going to have seven resorts containing more than 3,000 rooms at Singapore.