With 2 Singapore hotels in the bag, Hoi Hup aims for local portfolio

Despite S$475m tag, company's chairman made a fast decision to pick up the 5-star Andaz hotel

Thu, Oct 17, 2019

TAY SUAN CHIANG


THE price tag was almost half a billion dollars - a new record - but Hoi Hup Realty did not dither when offered the Andaz Singapore hotel in the Rochor area.

"My chairman, Wong Swee Chun, went to see the place and really liked the hotel, so the deal went through quite quickly," said Hoi Hup general manager Koon Wai Leong.

The proposed S$475 million consideration for the 342-room luxury hotel works out to S$1.39 million per key. This is the highest total price ever achieved for a standalone hotel transaction in Singapore, and the third highest in Asia this year.

Mr Koon explained that Andaz was the right kind of product that Hoi Hup was looking for. "In general, hotels in Singapore for sale don't come by often, let alone one that is a five-star hotel. Andaz is a scarce product. The location is very good, being in a spot which caters to both business and leisure travellers."

The acquisition also fits Hoi Hup's "objective to add income producing assets to the portfolio to balance out the cyclical nature of real estate," Mr Koon said.

In addition to Andaz's five-star rating and prime location, Hoi Hup was also sold on other intangibles.

"The hotel has been built by a strong team, not only with M+S, but with renowned designers Ole Scheeren for the architecture and Andre Fu for the interiors. Most hotels on the market have been around for some years, but Andaz is almost brand new. Andaz ticks all the boxes."

M+S is the national joint venture between Malaysia and Singapore, which has agreed to sell wholly-owned Ophir-Rochor Hotel Pte Ltd (the developer and owner of Andaz Singapore) to Hoi Hup.

Mr Koon said it's unlikely any renovations will be needed. "We do not want to disrupt the hotel's operations. However, if there are any improvements that the operator can identify, we will definitely support that," said Mr Koon.

Managed by Hyatt Hotels Corporation, the Andaz opened its doors in late 2017.

It occupies the top 15 floors of the 39-storey Duo Tower, and has a rooftop bar. Hotel ballrooms and meeting rooms are on Level 3.

Hoi Hup is not ruling out more hotel buys, should the right opportunity presents itself. "We are not against looking outside of Singapore. But internally, we have decided that since we now have two hotels in Singapore, creating a portfolio of local hotels would be easier for us to manage."

The company also owns Courtyard by Marriott Novena Singapore, which Mr Koon described as a top business hotel in Novena.

Since 2015, the company has been acquiring commercial buildings in London, starting with 1 Golden Lane, a highly specified Grade II listed office building. In 2016, it acquired 63 Queen Victoria Street, a prime Central London multi-let commercial building. In August 2018, it acquired 322 High Holborn, a mixed use development and 44 Southampton Buildings, which is a single let on a 15-year lease to Beaumont Business Centres.

"The four buildings are all in core city locations with good yield. We look for assets that we can value add by way of refurbishment and asset enhancement," said Mr Koon.

Asked if the weakening pound in the last 12 to 18 months had affected recurring income and revenue, Mr Koon said "the earlier acquisitions in 2015 and 2016 have enjoyed reversionary rental yield increase so this has already more than offset the exchange losses".

The company also factored in the weakened pound for its acquisitions in 2018. "More importantly, we feel that in the long term, London is still a very strong investment location. We will continue to look at commercial and possibly hospitality projects in London. But we will see how Brexit pans out before making any further moves there."

For now, the focus is back on Singapore. In 2020, Hoi Hup will be launching three projects.

In February, it will launch Parc Canberra, a 496-unit executive condo (EC) five-minute walk from the upcoming Canberra MRT station, followed by Ki Residences near Clementi Road in March or April. The 660-unit condominium is built on the 999-year leasehold site of former Brookvale Park condominium which Hoi Hup Sunway - a joint venture with Sunway Developments - bought in February last year for S$530 million.

In the second quarter of 2020, the company plans to release units at an EC in Tampines. "The last EC that was launched in the east was in 2012. There has been a pent-up demand for this asset class that is in limited supply in the east," said Mr Koon.