DBS Group Research has maintained its 'buy' call and $10.50 for City Developments following its acquisition of a hotel in Seoul, as the company continues to redeploy proceeds from previous divestments.
On July 4, CDL announced the $143.9 million acquisition of the 408-room Nine Tree Premier Hotel Myeongdong II, or KRW343k per key.
The property is located in the prime Myeongdong-Euljiro commercial district and within walking distance to the Euljiro 3-ga subway station.
DBS points out that relative to some other transactions in 2022, which range from KRW370k to KRW480k per key, the acquisition price appears to be at the lower end of the range despite Nine Tree Premier Hotel is a bigger and possibly newer hotel.
Between 2021 and 2022, CDL divested some $3 billion worth of assets, including the Millennium Hilton Seoul, which was sold for $1.3 billion.
The acquisition of this latest hotel is the second this year and possibly the sixth major asset acquisition. Out of this $3 billion, DBS notes that thus far, CDL has redeployed just over half, of $1.6 billion.
"We believe prudent acquisition, taking opportunity of declining asset valuation environment could bode well for City Dev in the medium term," says DBS.
