Investor OUE Sells Oakwood Premier Hotel and Residences Singapore for SGD289m

Main Photo: The two-bedroom premier apartment at the Oakwood Singapore

Date: September 2019

Location: OUE Downtown, Shenton Way, Singapore

Name: Oakwood Premier Hotel & Residences

No. of Keys: 268 studio, one and two bedroom apartments

Seller: Property developer and investor OUE Limited, who had offered the asset to OUE Hospitality Trust, but trustees had declined the option. OUE has inked agreements to sell Oakwood Premier OUE Singapore, its luxury serviced residences and hotel business along Shenton Way, for $289 million in total.

Buyer: Joint venture firm formed by Hong Kong financial services firm AMTD Group and hotel operator Dorsett Hospitality International. Dorsett is wholly-owned by Hong Kong-listed property giant Far East Consortium International (FEC).

In a bourse filing early on Thursday morning (Sept 19), OUE said that Alkas Realty, its wholly-owned subsidiary and property holding firm, has entered into property sale and purchase agreement (SPA) with DHI Holding (S) Pte Ltd for the sale and transfer of Alkas’ leasehold interest in Oakwood Premier together with all plant, machinery and equipment owned by Alkas. The 99-year leasehold interest expires in July 2066.

Besides the apartments, the property has two dining facilities and other amenities, occupying levels 7 to 32 of OUE Downtown 1. Total gross floor area spans 25,054 square metres (sq m),with strata title area of 23,234 sq m.

Meanwhile, OUE Downtown Pte Ltd (OUEDTPL), a wholly-owned subsidiary of OUE and serviced apartment operator, has also entered into a business SPA to sell the Oakwood Premier business and assets to DHI Downtown.

The purchase consideration for OUEDTPL is $1.9 million, and was negotiated after taking into account the book value of the business and assets, among other things.

The buyer, DHI Downtown, will apply to the Hotels Licensing Board to seek approval of the change of the name of the property to Oakwood Premier AMTD Singapore.

In its announcement on Wednesday, FEC said it is buying Oakwood Premier in order to build a stronger presence in Singapore – where it already operates the Dorsett Singapore hotel – and to further diversify its hotel portfolio.

The remaining short tenure of the existing third-party management contract also offers an opportunity for Dorsett to enhance its brand equity in Singapore, the Hong Kong conglomerate noted.

FEC’s board added that it finds the total purchase consideration of $289 million “attractive”, given the location, quality and potential of the property. Earlier this year, Oakwood Premier was granted the licence to be operated as a hotel, offering short-stay accommodation which is typically a more profitable segment of the hospitality market, FEC said. In contrast, serviced apartments without a hotel licence typically have a minimum-stay requirement of seven days.

In the medium term, FEC believes that through some light asset enhancement, the property could be remodelled to offer additional hotel rooms and deliver higher revenues per square foot.

Both the property and business transactions are conditional upon and subject to each other’s concurrent completion.

The property sale is also subject to the approval of Singapore’s President, currently Halimah Yacob, as head lessor.

Price: SGD$289m

Price per key: SGD$1,078,358 – around US$785k

THPT Comment: Good to see Dorsett still in expansion mode in jointly acquiring President Halimah Yacob’s commerical property. Not clear if Dorsett will keep the Oakwood brand, or change the name?

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