Mainboard-listed Overseas Union Enterprise (OUE), through its wholly-owned subsidiary Imperial Development Pte Ltd, has acquired the 320-room Crowne Plaza Changi Airport from LC Development and its partner LaSalle Asia Opportunity II SARL for S$299.5 million.
Under a signed deal, Imperial Development will pay LC Airport Hotel Ltd a total of S$293 million for the hotel and another S$6.5 million for net current assets on the books.
OUE, which manages two five-star hotels in Singapore, said it plans to develop an additional 200 hotel rooms for S$37 million. It added that the acquisition has increased the company’s hotel room portfolio in Singapore by 32 percent to 2,146 rooms.
Stephen Riady, Executive Chairman of OUE, said the acquisition was in line with the company’s strategy of purchasing prime assets and improving their value to ensure a steady stream of sustainable and good-quality recurrent income.
“If you look at our record over the years, we have acquired super prime assets and added value to them in order to boost yields,” he said.
“In the case of the Crowne Plaza, this is a unique and iconic hotel set next to Terminal 3 at Changi airport. Because of the tourism boom in Singapore, there is absolutely no willing seller for any good four-star or five-star hotel here. So we are very pleased with this transaction, and believe it is of great value.”
Given its price tag and the cost of the additional rooms, a 520-room hotel works out to approximately S$635,000 per room. This is a significant discount from the going price of more than S$850,000 per room for a similar hotel class around the country.
Mr. Riady said he is confident that Crowne Plaza Changi Airport, which enjoys an 89 percent occupancy rate, will sustain hotel room demand, as tourist arrivals in the country increase by more than 50 percent to around 17 million.