CDL Hospitality Trusts (CDLHT) has acquired the Studio M Hotel, which was launched in March last year, for $154 million (approximately $428,000 per room).
The yield-accretive purchase will initially be fully funded by debt, resulting in the trust’s debt-to-assets ratio increasing to approximately 26.5 percent post-acquisition, from 20.4 percent at the end of last year.
When asked about possible equity fund-raising plans, Vincent Yeo, CEO of CDLHT, remarked, “There is currently no immediate need to raise funds, due to our ample and diversified funding sources. At a post-acquisition gearing level of only 26.5 per cent and with the current favourable financing environment, we are likely to finance this acquisition with other debt facilities, including the S$1 billion Multi-currency Medium Term Note Programme established last year.”
Following the acquisition, the trust’s hotel rooms inventory in the country will increase 15.3 percent to 2,711 rooms, improving the trust’s exposure to the buoyant Singapore hospitality market.
The nine-storey hotel, which will be CDLHT’s sixth hotel in Singapore, was constructed on a 99-year leasehold plot that M&C group clinched for $45.8 million, or $518 psf of potential gross floor area (GFA), in November 2006.
Regarding CDLHT’s future acquisitions, Mr. Yeo remarked, “Singapore remains our favourite market in terms of prospects. By far, it is the most attractive market in the Asia-Pacific. We are also looking around South-east Asia and other growth markets like India and Vietnam, as well as Japan.”
“The phased opening of new attractions at the IRs, as well as other upcoming attractions in Singapore, can be expected to sustain the growth momentum of the tourism and hospitality sector,” he added.