Singapore-listed LHN Group continues to add properties to its rental residential portfolio with a deal to purchase a commercial block in the city-state’s Rochor district for S$80 million ($60.1 million), which was revealed in a regulatory filing on Friday.
LHN’s co-living division Coliwoo signed an agreement for the en-bloc purchase of the GSM Building at the corner of Middle Road and Waterloo Street at the northern fringe of Singapore’s urban core from its individual owners at a 5.88 percent discount to the vendor group’s asking price of S$85 million.
The purchase of the property opposite the Nanyang Academy of Fine Arts is Coliwoo’s third project purchase in the past six months, with the company planning to convert the asset into a mixed-use building with serviced apartments on the upper floors and commercial units on the first two levels, pending government approval.
“The GSM acquisition will expand the group’s portfolio of residential and commercial properties under its space optimisation business in Singapore, increase the brand value of Coliwoo, provide potential capital appreciation to the group, and provide additional opportunities to generate revenue,” the statement read.
Marked Down to Sell
While LHN’s winning tender was equal to the S$80 million appraised value of the GSM Building as of 1 February, it represents an 18 percent from the initial reserve price of S$98 million which the building’s owners had set during their first en bloc sale attempt in 2020. The vendors put their building back on the market last September and commenced their final and successful attempt in January at a reduced price.
The building at 141 Middle Road is currently split into 31 strata-titled office spaces on the upper levels and two retail units on the ground floor, with the property occupying a 12,003 square foot (1,115.1 square metre) leasehold commercial site with 59 years remaining on its lease term.
LHN said it will seek the approval of Singapore’s Urban Redevelopment Authority (URA) to change the usage rights of the asset to enable it to set up three to six to serviced apartments on the upper floors while keeping the first two floors for commercial use.
With the property currently approved for construction of up to 50,411 square feet of floor area, the developer is paying about S$1,587 per square foot for its foothold in one of Singapore’s hubs of higher education. Under the URA’s 2019 Master Plan the site has a building height restriction of 16 storeys.
The property is located within a 10-minute walking distance of the Bencoolen, Bras Basah and Bugis MRT stations, and within a few blocks of Singapore Management University and its more than 9,000 students.
The property also is within walking distance of shopping centres including Bugis Junction and Bugis Village.
LHN said it has the right to revoke the sale agreement and be entitled to a full refund of the total consideration price should the URA not grant its request to allow residential use of the building.
The company is funding the acquisition through a mix of internal cash resources and bank borrowings.
Beefing Up Portfolio
This latest acquisition adds to the assets under the Coliwoo rental residential brand with LHN less than a year ago having expanded the division into hospitality when it opened the Coliwoo Hotel Amber on Amber Road on Singapore’s East Coast.
In December LHN acquired the Kampong @ Arab Street hostel in Bugis district for S$6.39 million with that deal coming just a week after its S$30 million purchase of the 54-key Pasir Panjang Inn near the National University of Singapore near the West Coast.
LHN is in the process of converting both of its earlier acquisitions for co-living operations under its Coliwoo brand and plans to bring its portfolio to over 1,600 keys across ten operating and upcoming rental apartments. These recent acquisitions are in addition to existing Coliwoo rental residential properties in the central business district, Serangoon Road, Orchard Road and River Valley, in addition to its hotel properties.
“In FY2023 (year ending September 2023), the group is expecting new Coliwoo properties to be launched in Singapore which aims to provide flexible and affordable residential offerings, on the back of rising rental rates in Singapore partly due to the recent new property cooling measures introduced by the Singapore government,” the group said in its latest financial report.
Locals Dominate En Bloc
LHN’s win marks the third successful collective sale in Singapore so far this year as land-hungry local developers snap up sites at discounted rates.
Also on Friday, a joint venture between UOL Group and its Singapore Land Group subsidiary announced that it had won a tender for the Meyer Park condo complex at 81 and 83 Meyer Road in the East Coast for S$392.18 million. The partners plan to redevelop the building into a high-rise luxury condominium of 230 to 250 units.
Last month, local property and hospitality group Roxy-Pacific Holdings is understood to have led a consortium that won a tender for the collective sale of Bagnall Court on the Upper East Coast at a reduced price of S$115.3 million.