Capri, Citadines in advanced sale negotiations as hospitality returns to investor’s radar

A hotel or serviced apartment is a good investment in today’s environment because it has a high inflation rate.

Hotels may raise their rates for concerts or Mice (meetings incentives conferences and exhibitions). Rent rates are fixed in a typical 2- to 3-year office lease. Landlords cannot change the rate during this time.

The 299-apartment Citadines Raffles Place is said to have received an expressions of interest in the fourth quarterly of 2023. However, the buyer has not been identified.

The 285 rooms of the Dorsett Singapore are also being quietly sold. This hotel is connected to Outram Park MRT Interchange Station. The hotel is located on a property with a lease that has about 85 more years remaining.

The joint venture (JV) is reportedly doing exclusive due-diligence for a possible Capri purchase by Fraser Changi City. It includes entities that are linked to FEC and Atelier. TPG Angelo Gordon from the US may also be a part of this JV.

Room sizes range from 32 sq m to 70 sq.m at Capri Fraser Changi City.

Potential upside

It is possible to increase the value of an hotel by subdividing certain rooms and converting the underused public spaces, such as lobby areas, into revenue generating areas.

landmark

Capri Changi City by Fraser is part of an integrated development that includes a business-park component (One@Changi City), and the Changi City Point Mall. The project developed on the site awarded by JTC Corporation late in 2008. The site’s 60-year tenure began on April 30, 2009. The site lies within Changi Business Park. Cushman & Wakefield has been tipped to market Capri Fraser, Changi City.

Citadines Raffles Place in the CapitaSpring at Market Street is also undergoing a sales process. The lease term for the site, with the balance of the lease, is approximately 57 year.

Colliers, it is believed, conducted an expressions of interest (EOI), that closed during Q4 last. But a buyer for this serviced apartment has not yet been identified. According to the market, Olayan Group is among those who participated in the EOI. Market watchers are expecting the owner’s price per room to be at minimum S$1,000,000.

Citadines-Raffles Place is owned by a 45/45/10 joint venture involving CapitaLand Integrated Commercial Trust CapitaLand Development, and Mitsubishi Estate Co.

CapitaSpring has been on the site since 1982, with a 99-year tenure.

Property investment watchers say that the high return in travel to Singapore after Covid, and a busy event calendar are helping boost interest.

Singapore ticks a lot of boxes for those looking to buy a property. Singapore is considered a safe and clean place to travel. Singapore hotel property values have risen steadily over time.

Assets that are linked to inflation

She explained that in determining net yields, hotels will look at factors such the age, quality, and location of the hotel, as well the revenue-generating potential.

Far East Consortium International’s (FEC) owner is said to want about S$1.1million for each room. This would translate to a yield close to 4%.

The price of the 154 units Citadines Mount Sophia Serviced Residence is estimated to be S$150 million. BlackRock, Weave Living and other companies are reportedly doing due diligence to evaluate a potential acquisition.

Citadines Mount Sophia belongs to CapitaLand Ascott Trust. The leasehold estate is 81 years. Clas’ website indicates that the property was worth S$124 million at December 31, 2022.

The Wilkie Edge complex is a 12-storey complex located at the intersection of Wilkie and Selegie. Wilkie’s retail and office space was also recently sold.

Capri By Fraser, Changi City – a stone’s throw from Expo MRT Station and the Singapore Expo – will cost approximately S$170 Million. The Frasers Property 313-room Hotel is part a larger integrated project on a 45-year lease site. The strata of the hotel is almost 299300 square feet. This figure includes some vacant space.

A property investment agent with years of experience said that due to the high cost of borrowing, most buyers want at least 4 percent for a purchase. This is true unless the hotel is freehold and well-designed. It should also be in an attractive area.

A buyer in this case may be willing (to pay) a price that represents 2 to 3 percent of the net return, just to have the asset. Pricing a property is both science and art.

Prospective purchasers conducting exclusive due-diligence for Citadines Mount Sophia by Fraser and Capri, Changi City as well as other assets

Singapore’s property market has been dominated by hospitality sales, as the country has experienced a resurgence in travel.

Capri Fraser, Changi City, and Citadines Mount Sophia among the assets which are subject to exclusive due-diligence by potential buyers.


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