CDL Hospitality Trusts announced recently its plan to buy W Singapore hotel located at Sentosa Cove for a price of S$324 million.
The group also announced their plans to sell Novotel Singapore Clarke Quay (part of Liang Court) for S$375.9 million in an effort to redevelop the site.
It also will be making an estimated S$475 million investment in integrated development plan for a new hotel project.
Novotel Hotel @ Clarke Quay comprising of 403 rooms will be purchased by real estate bigwigs CapitaLand, Ascott Residence Trust and City Developments Limited (CDL). The hotel has a GFA of 34,909 sq m and is situated at River Valley Road.
It has lease holding till May, 2077.
CDLHT is expected to pocket S$369.3 million in profits after the sale is completed and is likely to use this sum in repaying current debts, funding future acquisitions like the W Hotel purchase and also to distribute percentages to shareholders.
This sale is seeing an 87% rise from the previous sale of the property which had happened in 2007 for S$201 m.
Independent assessors Colliers International Consultancy and Valuation had estimated a 1.9% higher value or S$7.2m for the sale.
However, in another valuation conducted by their hired assessors Knight Frank, CDLHT have got only 1.4% or S$5.4m more than what was projected.
CDLHT said that it will be making a forward purchase of 110% or S$475m (whichever is lower) for the hotel’s redevelopment cost.
CDL Hospitality Trusts will be getting paid in cash which will come in four portions and will be funded alongside debt financing.
The final funding method will be established once the completion of the project draws closer and payment will be due.
Both assessors Knight Frank and Colliers have put a value for the new hotel at S$481m and S$478m.
It is expected that the Novotel sale will be completed by April 2020.
The real estate bigwigs who are investing in Novotel have further plans to redevelop Liang Court – the site upon which the new hotel will be built.
There will be a new 99-year-old lease and the new hotel will be branded as Moxy, a Marriott International boutique hotel. The new hotel is expected to target new generation travellers.