The deal closed just under two months after Mingtiandi had reported that CapitaLand’s Ascott lodging division was in exclusive due diligence to acquire the 94,560 square foot (8,785 square metre) hospitality asset from a fund controlled by the Hong Kong-based private equity firm.
CapitaLand Investment, the listed fund management division of Southeast Asia’s largest real estate company, told Mingtiandi in an interview last year that it aims to boost fee income from its lodging business to S$500 million annually by 2028 – nearly doubling its current production from the category – with the company aiming to use acquisitions as one of the primary ways to drive that expansion.
Betting on Bugis and Bencoolen
Gaw Capital Partners had acquired in 2015 what was then the Big Hotel, at the intersection of Middle Road and Bencoolen Road, for S$203 million (then $144 million) as its first hospitality acquisition in Singapore.
Beh Siew Kim of Ascott is now among the directors of the company holding the Hotel G
The firm led by Goodwin Gaw had begun marketing the asset more than one year ago at an initial asking price of S$320 million. With rising interest rates helping to bring trades of income earning property assets in Singapore down by 29 percent in the first nine months of the year, according to MSCI, Gaw Capital achieved 75 percent of that target price.
As the investment in the 16-storey hotel is now more than eight years old, industry analysts speculated that the firm may have been motivated to divest the asset in order to return capital to investors.
Both Gaw Capital and CapitaLand had not yet replied to inquiries from Mingtiandi by the time of publication.
At the reported compensation, CapitaLand is paying the equivalent of S$779,220 per key or S$2,538 per square foot for the asset, where the typical 118 square foot room is available in February at around $95 per night.
The hotel, which started life as an office block before being converted for hospitality use by a previous owner, is within a few minutes’ walk of Lazada’s headquarters on Bras Basah Road, along with the Bencoolen and Bras Basah MRT stations.
With the GuocoLand’s Guoco Midtown having helped to pull Singapore’s commercial centre of gravity a bit closer to the Bugis area, the hotel is located 900 metres (just over a half mile) from that 709,000 square foot office building, which surpassed 90 percent take-up in November.
Loving that Lodging
CapitaLand Investment saw income from its lodging business jump 31 percent in the first nine months of this year, according to company financial reports, with the company looking to expand on that success.
“Lodging has had such great tailwinds. It has exceeded our expectations and it exceeded its targets last year, which is why we raised the bar on the targets again for 2028,” CapitaLand Investment’s chief financial officer Paul Tham told Mingtiandi in a November interview while his colleagues were already locked into exclusive negotiations to acquire the Hotel G.
CapitaLand Investment earned S$249 million in fee income from its lodging business during the first nine months of 2023, enough for the segment to surpass commercial management as the biggest contributor to the company’s fee business at 31 percent of the total.
Among the four CapitaLand directors now listed as controlling the Hotel G, Beh Siew Kim is chief financial and sustainability officer for the group’s Ascott Ltd lodging unit. Hoe Kit Mak is a managing director in charge of private equity investments in the lodging sector for CapitaLand and Patricia Goh is chief executive officer for Southeast Asia investment.
Goh helped lead CapitaLand’s recent establishment with Thailand’s Pruksa Holding of a fund targetting wellness and healthcare investments in Southeast Asia. Edward Bin Chung Yiu is a vice president for finance with CapitaLand.
