UOL Group has sold Parkroyal Kitchener Hotel for $525 million to Midtown Properties.
The latter shares the same registered address as Hotel 81 Management and Worldwide Hotels, whose chairman is Choo Chong Ngen, founder of the Hotel 81 chain. His daughter, Carolyn Choo, is the group’s managing director and CEO.
The hotel, with 542 rooms, is held under UOL's hospitality unit Pan Pacific Hotels Group. Located along Kitchener Road, off Serangoon Road, the property is near Mustafa Centre and City Square Mall, which is linked to the Farrer Park MRT station on the Northeast Line.
"This acquisition aligns perfectly with our growth strategy and allows us to expand our commitment to deliver guest experiences with exceptional value and thoughtful customer service in strategic locations," says Choo, the CEO.
"This new addition expands Worldwide Hotels Group's portfolio to 41 properties in Singapore, including 2 new hotels slated to open in Q4 2023. This reaffirms the Group’s position as a leading player in the local hospitality industry," she adds.
The six brands under Worldwide Hotels Group are: Hotel Mi, Hotel Boss, V Hotel, Value Hotel, Venue Hotel, and Hotel 81,
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The hotel will be re-branded and will be launched after the takeover has been completed in Q4 2023.
JLL advised on the sale. According to JLL Hotels & Hospitality Group CEO for Asia Pacific Nihat Ercan, the Parkroyal Kitchener deal is the largest single-asset hotel transaction in Singapore and the second largest in the Asia Pacific region this year.
"This deal underscores the enduring appeal of Singapore as a safe haven investment destination amidst global macroeconomic uncertainty and its status of one of the most attractive long-term hotel markets globally," he says.
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UOL currently holds the hotel at $83 million on its books. Upon completion of the sale, UOL book a gain of $446.2 million.
According to a Jan 9 valuation by Jones Lang LaSalle Property Consultants, the hotel is valued at $423 million as at Dec 2022.
"The proposed disposal provides a good opportunity for the group to unlock the value of its investment in Parkroyal Kitchener Hotel at an attractive price, and is part of the group's reconstitution of its overall property portfolio," says UOL on July 4.
On a pro forma basis, UOL’s NTA will lift up by 4.2% to $13.08, while pro forma FY2022's earnings per share would increase from 58.24 cents to 111.94 cents. The unlocking of value indicates that UOL is no longer a value trap with the discount between its trading price and NAV set to narrow.
"The divestment came as a good surprise as UOL took first steps in unlocking its asset value, riding on the recovery of the hospitality industry post-COVID, and optimise its portfolio," says DBS in its July 5 note.
"While this is UOL’s first divestment in a long while, further asset recycling strategy at above its asset valuation may spur appreciation in UOL’s valuation which is currently undervalued at 0.5x P/B," adds DBS.
"Following the footsteps of its peers in asset recycling strategy, we hope that UOL will also share the spoils with its shareholders via dividends as its peers had previously declared record distributions," says DBS.
As at 3.49pm, UOL shares gained 1.72% to change hands at $6.50.
