Gaw Capital Partners has completed the sale of the Hotel G in Singapore to an entity controlled by CapitaLand Group, according to corporate records filed with local authorities.
A special purpose vehicle which holds the 308-key budget hostelry now lists as its directors, Beh Siew Kim, Hoe Kit Mak, Patricia Goh and Edward Bin, all senior executives with Capitaland Group’s investment or lodging units, with sources familiar with the transaction saying the Temasek-backed giant paid just under S$240 million ($180 million) for the property near the Bugis area.
In a statement early on Tuesday, CapitaLand Investment said that the freehold property had been acquired by a 50:50 joint venture between Ascott Ltd and CapitaLand Wellness Fund, a vehicle jointly established just over two months ago with Thai developer Pruksa Holding. The group says it plans to reposition the property under its Lyf co-living brand.
The acquisition is aligned with Ascott’s asset-light growth strategy, as we invest alongside our funds while growing a pipeline of quality assets that can be subsequently injected into our other funds,” Kevin Goh, chief executive for Ascott and CapitaLand Investment Lodging said in the statement. He added that, “With the rebranding of the property under the Lyf brand coupled with Ascott’s award-winning operational expertise, Lyf Bugis Singapore is well-positioned to capture travel demand while uplifting the value of the asset.”
CapitaLand Investment, the listed fund management division of Southeast Asia’s largest real estate company, told Mingtiandi in an interview last year that it aims to boost fee income from its lodging business to S$500 million annually by 2028 – nearly doubling its current production from the category – with the company aiming to use acquisitions as one of the primary ways to drive that expansion.
Betting on Bugis and Bencoolen
The deal closed just under two months after Mingtiandi had reported that CapitaLand’s Ascott lodging division was in exclusive due diligence to acquire the 94,560 square foot (8,785 square metre) hospitality asset from a fund controlled by the Hong Kong-based private equity firm.
The transaction marks the first acquisition under CapitaLand’s wellness fund, dubbed C-WELL, which aims to invest in wellness and healthcare-related real estate in Southeast Asia.
‘The Bugis-Bras Basah precinct, with its diverse mix of retail, workspaces, residential and medical facilities, has the potential to be transformed into a thriving hub for wellness and corporate healthcare, attracting both local and international visitors,” said Patricia Goh, who serves as CapitaLand Investment’s Southeast Asia chief executive and is leading the new vehicle. She added that, “Together with the other CLI-managed properties in the precinct, we now have the unique opportunity to develop an integrated wellness hospitality ecosystem that meets the growing demand for wellness and healthcare-related tourism.”
As part of transforming the property into a wellness centre, CapitaLand said the hotel would make available to guests a comprehensive suite of telehealth, telecounseling and travel security advisory services, and that an “Ambassador of Buzz” would seek to drive mindfulness for individuals.
Changes to the property range beyond the metaphysical into more earthly details, with CapitaLand indicating that it will seek a Gold certification for the hotel under Singapore’s Green Mark standards for sustainable structures.
Gaw Capital Partners had acquired in 2015 what was then the Big Hotel, at the intersection of Middle Road and Bencoolen Road, for S$203 million (then $144 million) as its first hospitality acquisition in Singapore.
The firm led by Goodwin Gaw had begun marketing the asset more than one year ago at an initial asking price of S$320 million. With rising interest rates helping to bring trades of income earning property assets in Singapore down by 29 percent in the first nine months of the year, according to MSCI, Gaw Capital achieved 75 percent of that target price.
As the investment in the 16-storey hotel is now more than eight years old, industry analysts speculated that the firm may have been motivated to divest the asset in order to return capital to investors.
Both Gaw Capital and CapitaLand had not yet replied to inquiries from Mingtiandi by the time of publication.
At the reported compensation, CapitaLand is paying the equivalent of S$779,220 per key or S$2,538 per square foot for the asset, where the typical 118 square foot room is available in February at around $95 per night.
The hotel, which started life as an office block before being converted for hospitality use by a previous owner, is within a few minutes’ walk of Lazada’s headquarters on Bras Basah Road, along with the Bencoolen and Bras Basah MRT stations.
With the GuocoLand’s Guoco Midtown having helped to pull Singapore’s commercial centre of gravity a bit closer to the Bugis area, the hotel is located 900 metres (just over a half mile) from that 709,000 square foot office building, which surpassed 90 percent take-up in November.
Loving that Lodging
CapitaLand Investment saw income from its lodging business jump 31 percent in the first nine months of this year, according to company financial reports, with the company looking to expand on that success.
“Lodging has had such great tailwinds. It has exceeded our expectations and it exceeded its targets last year, which is why we raised the bar on the targets again for 2028,” CapitaLand Investment’s chief financial officer Paul Tham told Mingtiandi in a November interview while his colleagues were already locked into exclusive negotiations to acquire the Hotel G.
CapitaLand Investment earned S$249 million in fee income from its lodging business during the first nine months of 2023, enough for the segment to surpass commercial management as the biggest contributor to the company’s fee business at 31 percent of the total.
Among the four CapitaLand directors now listed as controlling the Hotel G, Beh Siew Kim is chief financial and sustainability officer for the group’s Ascott Ltd lodging unit. Hoe Kit Mak is a managing director in charge of private equity investments in the lodging sector for CapitaLand and Patricia Goh is chief executive officer for Southeast Asia investment.
Goh helped lead CapitaLand’s recent establishment with Thailand’s Pruksa Holding of a fund targetting wellness and healthcare investments in Southeast Asia. Edward Bin Chung Yiu is a vice president for finance with CapitaLand.
Note: This story has been updated to include details from CapitaLand’s statement on Tuesday.
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