CDL Hospitality Trust buys two hotels for $799m

This move is part of its Liang Court Site redevelopment plans.

CDL Hospitality Trust (CDLHT) is acquiring the W Singapore Sentosa Cove hotel and another new hotel for a combined price of $799m, the company announced.

CDLHT is also selling its hotel Novotel Singapore Clarke Quay for $375.9m to a consortium comprised of City Developments, CapitaLand, and Ascott REIT as part of its bid to redevelop the Liang Court Site into an integrated development. The price comes at an 87% premium over the hotel’s original purchase price, according to CDLHT.

The acquisitions are reportedly part of the Liang Court Site redevelopment plan.

The exit net property income (NPI) yield of the divestment and the stabilised NPI yield of the acquisition n on a pro forma basis both stand at 5.6%. As a whole, the proposed transactions are expected to result in a 2% DPS accretion on a pro forma FY2018 basis.

CDLHT expects to recognise a total divestment gain and fair value gain of $36.3m following the divestment of Novotel at a 12.9% premium to its previous valuation on 31 December 2018.

Meanwhile, the The W Hotel purchase represents a 3.1% NPI yield and the Proposed W Hotel Acquisition is expected to result in a 0.9% DPS accretion on a pro forma FY 2018 basis, said CDLHT.

With the acquisition of the W Hotel combined with the divestment of NCQ, and prior to the
acquisition of the New Hotel, CDLHT’s pro forma gearing would be at 35.3% , leaving it with a debt headroom amounting to $512.7m, assuming a 45% gearing limit for CDLHT as a whole.

The Liang Court Site has a total gross floor area of more than 100,000 sqm including the new hotel, two residential towers expected to offer around 700 apartment units, a commercial component, and a serviced residence with a hotel licence.

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